There are two main reasons why TAG FSA plans have high participation in Dependent Care Spending Accounts.
1) We place a lot of emphasis on employee education. Because of the thorough nature of our FSA communication practices, employees with qualified dependent care expenses are simply more comfortable using a TAG flexible spending account.
2) Our Continual Reimbursement option. Since most child care providers do not accept debit cards as a form of payment, participants with childcare expenses are forced to pay their provider with after-tax money and then submit for reimbursement from their flex account. This creates a cash flow problem for many rank and file employees.
Example: Jane Smith knows that using a dependent care spending account will save her $125 /month and $1,500 /year in child care expenses (30% of $5,000). However, Jane chooses not to participate because she can’t afford to redirect $200 of every paycheck into a flex account and also pay her child care provider at the same time. Jane is essentially paying for the service twice, before submitting for FSA reimbursement and then receiving her tax benefits. It is a simple cash flow dilemma that hinders Jane and many other rank and file employees from participating.
Solution: To eliminate the cash flow problem for participants like Jane, we use a process called ‘Continual Reimbursement’. At open enrollment Jane provides us with her cost of child care and the Tax ID number of her child care provider (or SSN if the provider is not a child care facility). She then takes our continual reimbursement form to her provider for endorsement. This form now acts a receipt for the entire plan year. Jane no longer needs to submit receipts to TAG for reimbursement. Every payday Jane’s dependent care FSA contributions are automatically directly deposited into her checking account – same day!
Our Continual Reimbursement process removes the cash flow obstacle for thousands of employees and allows them to take advantage of their company sponsored FSA plan.
To learn more about Continual Reimbursement and other unique aspects of TAG FSA plans, give us a call. We’d love to hear from you… (877)506-1660
