Rep. Axne Introduces Bipartisan Legislation to Preserve Parents’ Child Care Savings for Future Use
Today, Rep. Cindy Axne (IA-03) introduced bipartisan legislation that will prevent families from losing thousands of dollars in funds for child care services that have been unable to be spent because of child care facility closures due to coronavirus (COVID-19).
Dependent care assistance plans (DCAPs) allow working parents to set aside pre-tax income to cover costs of child care, but this tax benefit is a “use it or lose it” credit which expires and resets at the end of each calendar year.
The COVID-19 Dependent Care Flexible Spending Arrangement Rollover Act of 2020, introduced today with Rep. Pete Stauber (MN-08), would allow parents and families to roll over the unspent money in their DCAPs from 2020 to 2021.
“COVID-19 has shut down child care facilities across this country, and as a result many parents who have saved money to pay for these services have still kept their children at home. We should not punish families who budgeted that money away in a DCAP account but now aren’t likely to use those funds until facilities fully reopen,” said Rep. Axne. “Families shouldn’t be forced to start over at zero on January 1st, especially as financial uncertainty continues to hang over our middle class. My bipartisan bill is a commonsense fix to prevent hard-earned dollars from disappearing at the end of this year.”
“Since the COVID-19 pandemic began, countless parents across the nation have not had access to their usual childcare services. Without an answer as to when their children can safely return to school or daycare, many of these families risk losing all the money they have saved for this specific purpose,” said Rep. Stauber. “Hardworking families should not be punished for circumstances that are entirely out of their control. That’s why I am proud to introduce bipartisan legislation that will allow DCAP funds to rollover into 2021 and ensure families are better prepared to foot this expense once this crisis is over.”
Currently, DCAP accounts allow for up to $5,000 annually to be set aside for child care costs, but due to the public health restrictions of COVID-19, most child care providers have been closed for months, and there is no set date when they will be able to safely reopen.
The legislation has been endorsed by the Early Care and Education Consortium (ECEC), Employers Council on Flexible Compensation (ECFC), Save the Children Action Network, National Child Care Association, First Five Years Fund, Iowa Primary Care Association, EveryStep – Iowa, Iowa Association for the Education of Young Children, Child and Family Policy Center, United Way of Central Iowa, and Iowa Community Action Association.
“Affordable, high quality childcare is a necessity for Iowa’s working families and one of the many barriers our patients face while working toward improved overall health. As the COVID-19 pandemic continues, allowing the flexibility to rollover these unused funds into 2021 will be not only important for our patients, but also healthcare workers on the frontlines of this public health emergency,” said Aaron Todd, Chief Executive Officer of the Iowa Primary Care Association.
“It is necessary to support families access high quality child care, these experiences increase as a child’s ability to be ready for school emotionally, academically, and socially. Quality child care gives our children the best start in life,” said Jillian Herink, Executive Director of the Iowa Association for the Education of Young Children.
“Many Iowa families with children spend a large portion of their earnings on child care. For them, holding onto every dollar matters. We’re happy to support this bill, which will provide certainty to Iowa families trying manage their budgets and their children’s care during a health and economic crisis that’s sure to continue past the end of the calendar year,” said Anne Discher, Executive Director of the Child and Family Policy Center in Des Moines.
“As the coronavirus pandemic forces child care centers to close, parents are stepping up to care for their children at home or finding alternative solutions within their communities. With no child care to pay for, those families who have saved thousands of dollars in dependent care assistance plans are at risk of losing that unused money at the end of the year,” said Sarah Rittling, Executive Director of the First Five Years Fund. “Now more than ever, Congress must be focused on providing relief for working families. We are pleased to see Congresswoman Axne and Congressman Stauber working together on a bipartisan proposal that ensures parents will not be penalized for a national crisis outside their control. This pandemic drastically changed every aspect of our lives, and this common sense legislation will give parents one less thing to worry about as we recover from this pandemic and return to normalcy.”
Earlier this year, Rep. Axne and Rep. Stauber co-led bipartisan legislation that would increase the annual contribution limit on DCAP accounts from $5,000 to $10,000. The $5,000 limit was set by the IRS in 1986 and has not been increased since. In 2020, $5,000 only covers approximately half the yearly cost of child care.