U.S. Representative Jackie Walorski (R-Ind.) Wednesday announced legislation to provide working families with greater flexibility to pay for childcare by allowing them to contribute more to an employer-sponsored dependent care flexible spending account (FSA) and to roll over unused funds at the end of the year. The Working Families Childcare Access Act would also expand eligible expenses to include adoption, tutoring, sports activities, and art and music programs.
“America’s working families have faced unprecedented challenges over the past year,” Congresswoman Walorski said. “Making sure they have access to affordable childcare – and better tools to pay for it – will be key to rebuilding our economy. By giving working parents more flexibility to save their hard-earned money and use pretax dollars for a wide range of childcare expenses, this commonsense legislation would make it easier for families to navigate uncertain times and help them thrive.”
Walorski, the top Republican on the Ways and Means Subcommittee on Worker and Family Support, spoke about the legislation at a full committee hearing on expanding access to paid family leave and child care.
“This is not a Republican or Democrat issue, and I hope this hearing is an opening for us to work together,” Walorski said. “We agree on the need for smart pro-family policies that enhance access to both child care and paid family leave benefits. The biggest question is how we solve it. We know families want child care and paid leave, but they don’t want smaller paychecks. We also know small businesses want to provide benefits to their workers but can’t manage additional mandates and regulations from Washington.”
Video of Walorski’s remarks at the hearing can be found here.
BACKGROUND
Families can use pretax dollars to pay for qualified child care expenses using an employer-sponsored dependent care FSA. Eligible expenses include preschool, summer day camp, before or after school programs, and child or adult daycare. However, annual employee contributions to these tax-advantaged accounts are currently limited to $5,000, and any funds not used by the end of the year are forfeited. As a result, just one percent of all taxpayers take advantage of these accounts.
H.R. 2714, the Working Families Childcare Access Act, would improve dependent care FSAs by tripling contribution limits, allowing funds to roll over at the end of the year without penalty, and expanding eligible expenses. The added flexibility would help working families pay for child care and related expenses, and it would incentivize more Americans to participate in programs like dependent care FSAs.
The Working Families Childcare Access Act would benefit working families by:
- Increasing annual contribution limits: In order to help offset the rising costs of child care, the bill would increase the annual contribution limit to $15,000, tripling the current inadequate limit of $5,000.
- Eliminating the burdensome “use-or-lose” rule: Working parents should not be penalized for putting money aside for child care during uncertain times. The legislation would allow them to roll over unused FSA funds into the following year without penalty.
- Expanding qualified expenses: The legislation would give parents more flexibility to use their dependent care FSA funds for adoption expenses, tutoring, sports activities, and art and music programs.
- Raising age limits: In order to ensure parents can save for child care and related expenses over a longer period of time, the bill would allow FSA funds to be used for children and dependents up to age 15, an increase from the current age limit of 13.
Read the full text of the legislation here.
Walorski represents the 2nd Congressional District of Indiana, serving as a member of the House Ways and Means Committee and the Ranking Member of the House Ethics Committee.
