DCAPs and New Definition of Dependent

[Christine Roberts]

How are practitioners/administrators handling DCAP enrollment for 2005, given the new definition of dependent under IRC Sec. 152, and in particular the earnings cap imposed on "qualifying relatives"?

There is legislation pending to remove the earnings cap for purposes of a dependent care reimbursement arrangement, but it will not likely become law until later this year (2005).

Just wondering if people are taking the conservative approach and imposing the earnings cap for purposes of enrollment, or are counting on fix-it legislation to remove the cap sometime later this year.

[Guest akwallace]

Our FSA administrator has advised that they will not modify their claims processing documentation to include the earnings limit. They are of the opinion that this will be reversed, and are allowing dependent care claims to be submitted based on the "old" criteria.

But I would be interested to see how other administrators are handling this.

[Christine Roberts]

I have heard from a very reputable, long-established flex adm'r. in So. Cal that IS imposing the limit pending any corrective legislation.

I hope your FSA adm'r has a correction plan in place if, in fact, the limit is never lifted.

[Kirk Maldonado]

My guesses are: (1) a lot of the software programs haven't yet been updated, and (2) those administrators that do comply probably have their own software or tweaked the program that they bought.

Anybody (besides Christine) have any real-world experience on this issue?