Dependent Care Assistance Program


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About DeCAP

By enrolling in the Dependent Care Assistance Program (DeCAP), City employees are able to pay for eligible dependent care expenses on a pre-tax basis, with deductions taken directly from paychecks. These deductions reduce an employee's gross income on his/her Form W-2 for federal and Social Security tax purposes.

DeCAP is a way to pay for expenses to care for your child(ren) or other dependents, with before-tax dollars, while you and your spouse work or attend school full-time.


Eligibility

Employees eligible to participate in DeCAP must be covered by: Read More

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  • New York City health insurance, and
  • The Citywide contract, or
  • The Management Benefits Fund.

Agencies include:

  • Mayoralty
  • Health + Hospitals (H+H)
  • Housing Authority
  • City University of New York (CUNY)
  • School Construction Authority (SCA)
  • Department of Education (DOE) 

Employees of cultural institutions, libraries and DOE charter schools may be offered a DeCAP program through their individual institutions. Please contact your Benefits Manager for additional information.

Calculate your potential savings with the DeCAP calculator


Annual Open Enrollment Period

Each year, the Open Enrollment Period for the following calendar year will generally be held from September to October. New employees may enroll within 30 days after becoming eligible to receive City health benefits.  Read More

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Elections will be effective January 1st, or the date of your first payroll deduction if you become eligible after the beginning of the Plan Year. Newly eligible employees may participate as soon as they become eligible for City of New York health benefits.

 

To participate, newly eligible employees must submit a Flexible Spending Accounts (FSA) Program Enrollment/Change Form with documentation within 30 days after becoming eligible for City of New York health benefits. Your annual election will be prorated over the remaining pay periods.

Important:  Enrollment is not automatic from year to year. You must re-enroll each year during the annual Open Enrollment Period.


How to Enroll

To enroll in DeCAP, you must obtain an FSA Enrollment/Change Form for Plan Year 2017 from either this site, the FSA Administrative Office, or from your agency's benefits office. Read More

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If you do not enroll in DeCAP within 30 days after becoming eligible, you must wait until the next annual Open Enrollment Period before you can enroll.

 

To request that the above-mentioned forms or the Program Brochure be faxed to you, call the FSA Administrative Office at (212) 306-7760 or leave your information to have them mailed to you.

Completed forms must be returned during the annual Open Enrollment Period to: 

City of New York
Flexible Spending Accounts Program
Bowling Green Station
P.O. Box 707
New York, NY 10274

 

Should you require assistance in completing the Enrollment/Change Form, please call the FSA Administrative Office at (212) 306-7760 between 9:00 a.m. and 4:00 p.m., Monday through Friday. In-house counseling is available by appointment only. 


Eligible Expenses

Find out which expenses qualify under the DeCAP Program. Read More

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You may reduce your taxable income by the amount you contribute to your DeCAP account for eligible dependent care expenses. These expenses must meet the following requirements:

Eligible Employment-Related Dependent Care Expense: It is a dependent care service that is related to the care of one or more of your dependent(s) (including household services related to such care), and that is performed within or outside your home during the period that you and your spouse are at work or attend school full-time.

Dependent Care Recipient: You may receive benefits for any dependent claimed on your tax return who is a spouse who is self-employed, however, you must provide a description of his/her occupation on letterhead stationery. Without letterhead stationery, notarization is required.

  • Your child (son, daughter, stepson, or stepdaughter) who is under age 13 or
  • Physically or mentally incapable of caring for himself/herself and who lives with you for more than half of the year, such as a dependent parent, a handicapped child of any age, or an incapacitated spouse.

 

You may submit reimbursement requests for eligible employment-related services that are performed by a Qualifying Caregiver.

Qualifying Caregiver: A person performing eligible employment-related services who is:

  • Not your dependent (or anyone you can claim as a dependent);
  • Not your spouse; or
  • Not your child or your spouse's child unless he/she has attained the age of 19 as of the close of the Plan Year in which the services were provided.

Qualifying Day Care Center: Licensed nursery schools, pre-schools, day camps (not overnight camps), before- and after-school programs, and child care centers that provide day care. The day care center must:

  • Comply with all applicable laws and regulations of the state, city, town, or village in which it is located;
  • Provide care for more than six individuals (other than individuals who reside at the day care center);
  • Receive a fee, payment, or grant for any of the individuals to whom it provides services (regardless of whether such facility is operated for a profit); and
  • Not be primarily for the purpose of education.

Note: Under DeCAP, you may only claim expenses if you are the custodial parent of a dependent child. You may not be reimbursed for any child support.


Annual Contribution Limit

Find out how much you can set aside annually. Read More

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Minimum $500

Maximum* $5,000


The amount you elect to contribute to your DeCAP account is a before-tax salary reduction. This includes a maximum annual administrative fee of up to $48.

 

The $5,000 maximum is reduced to $2,500 if you are married and file a separate federal income tax return (unless you are legally separated), or by the amount your spouse is contributing to a dependent care assistance program through his/her employer.

 

If you or your spouse earn less than $5,000 a year, your maximum benefit is limited to the lesser of the two incomes.

 

Spouse as full-time student or incapable of self care: If your spouse is a full-time student at an educational institution during at least five months of the Plan Year or is incapable of self care during any month, your maximum contribution is $250 a month for one dependent and $500 a month for two or more dependents.

* The maximum may be less in certain cases; e.g., highly compensated employees.


Claims, Reimbursements and Statements

To request reimbursement for dependent care expenses under DeCAP, you must complete a DeCAP Claims Form.

Filing a claim is easy. Here's How

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  1. List each expense and dependent separately on the Claims Form, and

  2. Have the dependent care provider sign and date the form and provide his/her name, address, and Federal Tax ID or Social Security Number.


Receipts and billing statements are not needed for DeCAP.

 

All claims must be submitted directly to the FSA Administrative Office and received by the last day of the month in order to be processed for that month. You will only be reimbursed for dependent care expenses that are provided during the applicable Plan Year.

Note

  • No reimbursement can be made prior to the service actually being provided.
  • No reimbursement can be made for any expense incurred while you and/or your spouse are not at work or attending school full-time (i.e., sick leave, maternity leave, summer vacation, etc.).

 

Claims should be submitted in a timely manner. A Claims Run-Out Period is provided, until February 28th following the close of the Plan Year, to submit claims for services performed during the previous period of coverage.

 

Although eligible dependent care expenses of any amount are reimbursable, the total amount of expenses on a DeCAP claims form must be $50.00 or greater, unless your current account balance is less than $50.00. 

Note: There is no Grace Period available for DeCAP.

DeCAP Claims Denial

If, for any reason, it is necessary for the FSA Administrative Office to deny a claim, you will receive a denial letter stating the reason for denial.

You may appeal the denial by filing a written appeal with the Appeals Panel within 60 days after your receipt of the denial notice. The Appeals Panel will review your claim and make a determination within 60 days after receipt of your written notice for appeal.

DeCAP Reimbursements

Reimbursement for approved claims processed during one month will be automatically deposited into the account you indicated on your Enrollment/Change Form or Direct Deposit Form by the close of the following month.  Or you may choose to have reimbursement checks sent to your home address.

 

Claims will only be reimbursed up to the current balance in your account. If for any reason there are insufficient funds in your account to cover the expenses claimed, only that portion of your claim for which there are sufficient funds will be reimbursed. The balance will be carried forward to the next month for payment.

 

If a claim exceeds your balance at the end of the Plan Year, you will receive a check exhausting your account.

Note: Payments will be made directly to you and not to the service provider.

DeCAP Account Statements

Every month, you will receive a statement indicating your opening account balance, all contributions to your account, processed claims, a maximum account administrative fee of $4.00 per month, and your closing account balance. 

 

After the Claims Run-Out Period, you will receive an annual statement that reflects the total amount contributed to and reimbursed from your account for the Plan Year.

 

In addition, the amount you contribute to DeCAP will be reflected on your Form W-2, which you receive from your employer. Your gross income for federal tax purposes will reflect the adjusted amount.

 

Note:

  • You must add back the amount listed as IRC 125 on your Form W-2 to your state/city gross wages.
  • You must also attach Form 2441 Child and Dependent Care Expenses to your Form 1040.

Forfeiture Rules 

A word of caution: Federal regulations require that you use the entire amount in your DeCAP account by the end of each Plan Year (December 31st). If you do not use the entire amount you allocate to your account, you forfeit the unused balance. This is referred to as the "Use It or Lose It" rule.

 

Before participating in DeCAP, you should carefully consider what your eligible expenses might be. Reviewing your expenses from previous years can help.

 

Once you have estimated the amount of your expenses, you may then determine how much to contribute to DeCAP.

 

A Claims Run-Out Period is provided, following the close of the Plan Year, to submit claims for services performed during the previous Plan Year.

 

You may submit any claims incurred during the Plan Year in which you were a participant in DeCAP as follows:

2016 Claims Deadline: February 28, 2017
2017 Claims Deadline: February 28, 2018

 

If you overestimate your expenses and contribute more than your actual expenses, or if you do not submit approved claims equaling in total your annual allocation, prior to the end of the Claims Run-Out Period, you will permanently forfeit any unused amounts remaining in your FSA account.

 

 

Note: If you participate in both HCFSA and DeCAP, the amount you allocate to one account cannot be transferred to the other. 


Mid-Year Changes

Under certain circumstances, such as Qualifying Events and termination of employment, changes can be made to your account.Read More

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Qualifying Event

Under DeCAP, you may only make changes in the amount you contribute or the number of dependents covered. However, you must experience a mid-year Qualifying Event in order to effect such a change.


The definition of a Qualifying Event is determined by the Internal Revenue Service (IRS).

 

Qualifying Events include but are not limited to:

  • Marriage, divorce or annulment;
  • Birth or adoption of a child;
  • Death of a spouse or dependent;
  • Ineligibility of a dependent;
  • Start or termination of employment of participant or participant's spouse;
  • Changing from part-time to full-time status or vice-versa by participant or participant's spouse;

OR

  • Taking an unpaid leave of absence by participant or participant's spouse.

 

Should you experience a Qualifying Event and wish to change your contributions to the Plan or terminate your participation in the Plan, you must notify the FSA Administrative Office directly by submitting an FSA Enrollment/Change Form within 30 days after the Qualifying Event with proper documentation.

Note: You can have more than one Qualifying Event per Plan Year.

Agency Transfer

If you transfer agencies within the City or transfer to a City-related agency, you must notify the FSA Program Administrative Office in writing at least 30 days prior to your transfer in order to continue your payroll deductions or recalculate your remaining payroll deductions.

Termination of Employment

You will have until December 31, 2017 to submit claims for any money already deposited into your account for services rendered during the Plan Year as long as you and your spouse remain actively employed or are full-time students.  You also have a Claims Run-Out Period until February 28, 2018 after the close of the Plan Year to submit claims for expenses incurred during the previous Plan Year.

 

If the Qualifying Event is due to your termination, your contribution to DeCAP will cease as of your date of termination from employment or the last day of your employment. However, any remaining balance in your account prior to your termination date will be available for reimbursement upon receipt of a valid claim incurred during the Plan Year as long as you and your spouse remain at work.

Missed Deductions

If for any reason deductions cannot be made from any paycheck, your annual contribution allocation will be decreased by the amount of any missed payroll deductions. You will not be entitled to increase subsequent deductions to replace those missed. Therefore, it is important to notify the FSA Administrative Office if you are not experiencing payroll deductions.

Other

If you pass away during the Plan Year, the same conditions for termination as described on the page will apply. In addition, any claims for services provided before your death must be submitted by your spouse or your estate and will be paid to same. Documentation will be required. 


Effect on Other Benefits and Taxes

Find out how DeCAP effects your benefits and taxes, and learn how it differs from the Federal Dependent Care Tax Credit.Read More

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Social Security Tax (FICA): Contributions to DeCAP may reduce your Social Security taxes. If so, based on current Social Security law, Social Security benefits at your retirement age may be slightly less as a result of your participation in DeCAP. However, the effect would be minimal and would be offset by the amount saved in taxes today.  

 

 

Pension: Contributions to DeCAP have no effect on your pension contributions or benefits.

 

 

Deferred Compensation: Contributions to DeCAP will have no effect on your participation in a 457, 401(k), Roth 401(k) or 403(b) plan.

 

 

DeCAP & Taxes

Contributions to DeCAP are made through automatic payroll deductions on a before-tax basis. Therefore, your gross income on your Form W-2 will be reduced for federal income taxes and Social Security taxes (FICA). DeCAP will not affect your state or local taxes.

 

 

DeCAP and the Federal Dependent Care Tax Credit

The expenses that qualify as eligible employment-related expenses are generally the same for the Federal Dependent Care Tax Credit. Any expenses paid or reimbursed under DeCAP cannot be taken into account when calculating the Federal Dependent Care Tax Credit and vice-versa.


Please note that any payments received from DeCAP will reduce dollar-for-dollar the amount that can be considered for a Federal Dependent Care Tax Credit and vice-versa.

When deciding between using the Federal Dependent Care Tax Credit, or DeCAP participation, you should note that if you participate in DeCAP and DeCAP covers all your dependent care expenses (or you contribute the maximum amount under DeCAP), then you are not eligible for the 20% New York State tax credit for dependent care expenses.

 

For some employees, the Federal Dependent Care Tax Credit provides more tax savings; for others, DeCAP is better. The tax advantage between DeCAP and the Federal Dependent Care Tax Credit will vary depending on your income, whether you pay FICA taxes, the number of your dependents, and your eligible expenses.

 

For example, DeCAP allows $5,000 as a maximum benefit for one dependent, while the Federal Dependent Care Tax Credit allows a maximum benefit of $3,000 for one dependent ($6,000 for two or more dependents). However, while DeCAP reduces your taxable income, the Federal Dependent Care Tax Credit reduces your actual taxes.

 

You should also take into consideration that participation in DeCAP gives you an immediate reimbursement of eligible employment-related dependent care expenses; you need not wait until after the end of the year when you file your tax return and use the Federal Dependent Care Tax Credit.

 

 

 

The following example depicts the difference between DeCAP and the Federal Dependent Care Tax Credit based on the federal tax withholding table effective January 1, 2016. The following projections made are only estimates of federal tax information and should not be assumed to be tax advice. Be sure to consult a tax advisor to determine the appropriate tax advice for your financial situation.

 

Please note that the adjusted gross income amount in the following example assumes there are no other income adjustments.

 

Scenario: Married employee with a family income of $70,000 with two dependents (with Federal Dependent Care Tax Credit applying to both dependents) and filing jointly; DeCAP annual contribution of $5,000 and employee incurs $4,952 in reimbursable dependent care expenses.

 




While you may use both DeCAP and the Federal Dependent Care Tax Credit in the same tax year, you must be sure that:

  1. Your eligible expenses are reduced by what you receive in that tax year from DeCAP, and
  2. You do not claim the same expense more than once.

Calculate your Potential Savings Under the DeCAP Program 

Learn more about your W-2 Wage and Tax Statement from the Office of Payroll Administration

Learn more about Social Security from the Office of Payroll Administration

Download FSA Program Forms and Brochures

Have a Question?  See the DeCAP FAQs