Day Care Provided by Employers

Day Care Provided by Employers

Increase Production via Reduced Absenteeism

Day Care Provided by Employers - The rate of unscheduled absenteeism has risen to a five-year high of 2.4 percent, with the direct costs associated with unscheduled absences estimated at $610 per employee per year.

Child care enables $1.5 trillion in employee industry output each year” (“The National Impacts of the Child Care Sector”, The National Childcare Association, 2007).

Increase Retention and Recruitment

In order to retain valued employees and improve the corporate image, and at the same time gain tax benefits for themselves, many companies offer some type of financial help to employees who must pay for child or dependent care in order to work.

Professional employees rank the ability to balance work and family as the #1 factor in their decision to remain with a company.

Provide back to work assistance

  • Return to work programs help employees return to work 6-10 times faster. (UNUM Life Insurance Company of America, 2007).

  • Receive Corporate Tax Deduction
Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), corporations participating in on-site or near-site child care centers are eligible for a 25% tax credit.

Employee Benefits for Day Care

  • Dependent care as a fringe benefit — In some cases, the employer has set up on-site daycare centers, to which employees can send their young children. In other cases, employers subsidize the costs of child care by reimbursing employees for certain expenses.

  • Salary reduction assistance — however, the majority of companies that provide dependent care assistance do so by allowing employees to contribute part of their pretax wages to individual accounts under a "Flexible Spending Arrangement." The money is then used to reimburse the employee for child or dependent care expenses.

  • Claiming employer-provided assistance — all these types of assistance can be provided to the employee as tax-free fringe benefits, provided certain rules are met.
Employers may also offer a number of other dependent-related services, such as referrals to area day care centers, seminars or informational meetings, or employee assistance programs that provide counseling for personal problems that affect an employee's work. In most cases, these benefits are considered tax-free fringe benefits for employees.

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