Registration Fee for Infant Waiting List

[Guest javery]

Would a registration fee to put an infant on a waiting list be reimbursable under the Dependent Care Account?

[papogi]

If the registration fee is actually an upfront deposit that pre-pays for services that will be rendered, it is reimbursable, but only after the services are rendered. If the fee is not for actual services, it will never be reimbursable.

[Guest javery]

The receipt does not specify any dates it just says (infant waiting list) any suggestions?

[papogi]

You're going to have to go back to the employee for further documentation on this claim, even if that means the employee has to get more information from the provider. It is the employee's responsibility to provide claim substantiation, and there simply isn't enough here to reimburse. Whatever the dollars are for, nothing can be reimbursed at all until actual services are provided, so you have time to get further documentation from the employee.

[Guest MMJ]

Here's my question- if the daycare provider requires that you submit a registration fee with your application for daycare and without paying that fee you do not get into daycare-why wouldn't it be covered? Seems like there is no consistent answer on this subject. :confused:

[papogi]

You are right that registration fees have always been a source of confusion, and the IRS gives little guidance. The IRS says that reimbursable amounts are those that are for the care of the child. If the registration fee is an upfront charge for actual services to be rendered (basically, reimbursed to the parent once daycare begins), then you know this is reimbursable, and you only have to wait for the services to be rendered. If the registration fee is purely administrative, and will not eventually be applied as payment for care services, it can be viewed as ineligible. One argument for this is that the IRS says that expenses not for care (usually food, clothing, etc.) can be reimbursed if the charges are "small" and "incident to" and cannot be separated from the overall charges. The problem is that the registration fee is a separate charge, and easy to identify. I would err on the side of caution and not reimburse registration fees in this category.

[Guest MMJ]

Thanks-it seems like a no-win-if you don't pay the registration fee you don't get in therefore you do not have daycare expenses to be reimbursed. I guess if it was deucted from your first payment and your invoice clearly showed that this registration was an advance payment for care then it would be reimburseable - otherwise we won't be reimbursed

[SLuskin]

In South Florida, at least, these infant fees are to reserve a spot for your child for a school or daycare at some future time. For example, when the child is born, you can pay to have them on the list for the 3 year old class at "Harvard Kiddie Kollege". Clearly, this is a payment for a benefit which will not be received during the plan year. You also have to find out which year this waiting fee is for before you can consider it.

We do reimburse registration fees for the plan year in which the daycare was actually received. In our area, almost all of the daycares charge it as part of the daycare.

[QDROphile]

Perhaps you could discuss reimbursement in year 2 of an amount paid in year 1 when the services are not received until year 2. Seems like there would be timing issues. Or perhaps I misread your message. Do you require that the payment and the services be in the same year, even though it is OK for the services to be later than the payment?

[papogi]

Good point. I don't think you could require that the payment be in the same year as the services, however. Since dates of service rule, a reimbursable registration fee paid in year 1 will be reimbursed in the FSA of year 2 if services are rendered in year 2. True, it is a known cost, and the employee has an unfair advantage when it comes to filling out the year 2 flex election form, but I see no way around it. The FSA for adoption has a similar loophole and works very much the same. There are known amounts from one year that the employee can legally use in deciding on an amount to set aside for a later year (the year the adoption is finalized).