Dependent Care Flexible Spending Account The Dependent Care Flexible Spending Account (formerly known as the Dependent Care Assistance Plan) is a benefit that allows you to set aside pre- tax dollars from your paychecks to cover eligible dependent day care expenses. This is an IRS Flexible Spending Account or FSA. Team members may be eligible to set aside up to $5,000 a year on a pre-tax basis to pay for dependent day care expenses while you and your spouse, if married, work or look for employment. This plan is administered by Aon Hewitt. Who is Eligible? All regular full-time and eligible regular part-time team members. When Can I Enroll? All regular full-time team members are eligible to enroll upon date of hire. Enrollment must occur within the first 31 days of hire or change in status, within 31 days of a qualified coverage change event, or during an annual open enrollment period. A regular part-time team member that moves to full-time is eligible to enroll as of the date of the full-time status. Newly hired regular part-time team members are eligible if scheduled to work at least 20 hours per week and can enroll between days 60–90 of a 90-day employment waiting period. Current part-time team members are eligible to enroll annually during open enrollment if, as of September 1, they have averaged 20 hours per weeks worked during the prior 26 weeks. Participation Period Generally participation in the plan is from January 1 - December 31. However, if you join the plan mid-year (i.e., you are hired or experience a qualified coverage change event) your participation date for the first year begins as of your date of hire or the date of your qualified status change. Participation ends the date you terminate employment, are no longer eligible to participate in the plan or the date you drop coverage due to a qualified coverage change event. How do I enroll? You will need to go to the Your Benefits Resources™ (YBR) website by linking to it from Global Connections or going to the website directly at www.ybr.com/grainger within the first 31 days of hire or eligibility. You can also call the Grainger Benefits Service Center: 1-847-535 HR4U when calling from a Grainger facility or 1-888-477-3781 when calling from outside a Grainger facility. Select Option 3: Benefits or Leaves. Representatives are available Monday through Friday from 7 a.m. to 5 p.m. Central Time. You will need to determine your annual goal amount for the plan year to have set aside from your pay for dependent day care expenses. Enter this annual amount in YBR when you enroll. During the each annual open enrollment period, you elect the annual amount to set-aside during the next plan year through regular pre-tax payroll deductions. For both full-year and mid-year enrollments, the deduction amount will be calculated by dividing the annual goal amount by the number of remaining pay periods in the plan year. Your enrollment election will remain in effect through the end of the Plan Year for which you enroll. However, you may be able to change your election mid year if you experience a qualified coverage change event (providing you contact the Grainger Benefits Service Center to change coverage within 31 days of the event). How does the plan work? Each pay period, Aon Hewitt is notified of the amount deducted from your check. Upon notification, the funds are deposited to your account and are available for reimbursement. You should continue to pay your dependent day care provider as you normally would. After services have been rendered, complete a claim form and fax or mail it to Aon Hewitt for reimbursement. You will be reimbursed by check or direct deposit when adequate funds have been posted to your DCFSA account. You can view your account balance on the Your Spending Account page of YBR. You can sign up for direct deposit online as well. What Happens if I Don't Use All the Money? Your pre-tax contributions to the plan are subject to the ‘use it or lose it rule’. Any remaining funds in your account at the end of the plan year, grace period or when your participation ends (if earlier) will be forfeited. You benefit from the pre-tax contribution because you do not pay FICA, federal, or most state taxes on this portion of your income. Therefore, you will have more "take-home" pay than if you paid these expenses without using this benefit. Your voluntary contribution to this plan will be included in the pay amount used to determine your annual PST contribution. What Situations Can I Use this Plan? The Dependent Care FSA is designed for specific situations. You can elect a Dependent Care FSA if you and your spouse (if married) are working or in school, and: Your dependent children under age 13 attend day care, after-school care or summer day camp. You must provide care for a person of any age whom you claim as a dependent on your federal income tax return, and who is mentally or physically incapable of caring for himself or herself. The individual must be your qualifying dependent (child or relative) as defined by the IRS. If the individual is your child, he or she must be under the age of 13 unless physically or mentally unable to care for him- or herself. If the individual is your spouse, he or she must be physically or mentally unable to care for him- or herself. Individuals not able to dress, clean, or feed themselves, or who require constant attention to prevent injury to themselves or others because of physical or mental problems are considered unable to care for themselves. Please note: Simply being unable to work, perform normal household functions, or care for minor children does not mean an individual is incapable of caring for him- or herself. What is the Definition of a Temporary Absence? The definition of short, temporary absences is as follows: Generally speaking in SAP, if the team member is on a paid leave, contributions for dependent care will continue and when pay ends, contributions will end. The IRS rules state that dependent care pre-tax dollars can only be used for day care services that allow the team member to work or to look for work. The IRS allows the team member to receive reimbursements for short, temporary absences –defined as two weeks or less. It is the team member’s responsibility to end dependent care contributions for any time period greater than two weeks on leave of absence when a team member is unable to work. To request a temporary end of dependent care contributions or a reinstatement of dependent care contributions upon return to work, contact the Grainger Benefits Service Center: 1-847-535 HR4U when calling from a Grainger facility or 1-888-477-3781 when calling from outside a Grainger facility. Select Option 3: Benefits or Leaves. Representatives are available Monday through Friday from 7 a.m. to 5 p.m. Central Time. Dependent Care Flexible Spending Account IRS Rules 1. If you are single or if you are married and file a joint tax return, you can contribute up to $5,000 per year. If you are married and you and your spouse file separate tax returns, you can each contribute up to $2,500, as limited by federal law. 2. Dependent care expenses cannot be reimbursed before the services are provided, even if a childcare provider requires payment in advance. 3. Eligible expenses must be incurred while you are a plan participant. Expenses incurred after your participation in the plan ends are not eligible for reimbursement. 4. Children of Divorced or Separated Parents: A child can be the qualifying individual of only one parent in one year. Dependent care expenses for the custodial parent may be employment related expenses if the child: (1) receives over one-half of his/her support from one or both parents; and (2) is in the custody of one or both parents for more than one-half of the calendar year. 5. For part-time employees, dependent care expenses must be allocated between days worked and days not worked unless you are required to pay the care provider on a weekly or longer basis. 6. Your election may not be changed during the plan year (January 1 – December 31) unless there is a qualified coverage change event (IRS Section 125 rules apply as deductions are pre-tax). 7. Any unused portion of the original election is forfeited at the end of the plan year unless you utilize the grace period. The grace period is a 2½ month period ending March 15 following the end of the plan year where you may incur and submit eligible dependent day care expenses to be reimbursed from the prior plan year’s election amount. 8. All claims for the prior plan year must be filed by April 30th following the end of the plan year. What are considered eligible expenses? Childcare at a day camp or nursery school, or by a private sitter Elder day care for an incapacitated adult who lives with you at least eight hours a day Expenses for before-school and after-school child care (These expenses must be kept separate from any tuition expenses) Cost of a housekeeper whose duties include the care of a qualifying dependent. What are Considered Ineligible Expenses? Expenses for overnight camps; Expenses for education or tuition; Late payment fees; Placement fees for finding a dependent care provider; Sports lessons, field trips, clothing; Transportation to and from the child care provider General requirements concerning eligible dependent day care providers include: You must have made payments for child/dependent day care to someone you or your spouse could not claim as a dependent and if the person you made payments to was your child, he/she must have been 19 or older by the end of the Plan year. Provider information: To identify the care provider, you must provide the provider's: name; address; and Taxpayer Identification Number or Social Security Number. Questions? Please contact the Grainger Benefits Service Center: 1-847-535 HR4U when calling from a Grainger facility or 1-888-477-3781 when calling from outside a Grainger facility. Select Option 3: Benefits or Leaves. Representatives are available Monday through Friday from 7 a.m. to 5 p.m. Central Time.
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