Q.- An employee just had a baby. He would like to enroll in our dependent care assistance plan due to the life event. His wife will be home for five months to care for the baby, and he won’t need care until the wife goes back to work. Should he enroll now or later?
A.- This will depend upon the terms of your plan, but there likely will not be a life event in 5 months. The special enrollment event is the birth of the child, and therefore the enrollment should occur within 30 days of the birth. When the employee elects the amount he wants to contribute, he should carefully calculate the amount he will contribute to the DFSA. Expenses while the spouse is home on maternity leave are not eligible for reimbursement.
Amounts will be deducted from his paycheck upon enrollment. Of course he does run the risk that plans will change and he will not need the care in the future, but that is a risk of participating in an FSA. If he is worried about it, perhaps he does not want to enroll now and will just wait until the next plan year to enroll.
