OEM Fabricators, Inc., a Wisconsin based manufacturer with three locations and a Certified Family Friendly Workplace, has been searching for a solution to increasing dependent care costs for their Team Members.

 “We’ve seen dependent care become an increasing issue for our Team Members, both for children and elderly parents,” said Abby Klatt, OEM’s Director of Human Resources. “We customize work schedules based on individual needs, and offer a weekend shift for those providing care through the week.  However, even with this schedule flexibility, the struggle with availability and costs remains.”

Childcare Care Costs

Daycare is extremely expensive. According to the Economic Policy Institute, in Wisconsin:

• The average cost of daycare for a 4 year old is $10,197 annually, or around $850 per month;
• Care for an infant is even higher, at $12,567 annually ($1,047 per month); and
• A typical family in Wisconsin would spend 33.6% of its income on child care for an infant and a 4-year-old.

Potential Benefit Options

OEM reached out to benefit consultant, JA Counter based in New Richmond, Wisconsin, to review what options may be available to help Team Members with the expense. 

One option larger employers sometimes offer is onsite daycare, but OEM has three rural Wisconsin locations. 

• “Our plants essentially run 24/7, so finding an onsite solution that would be equitable for all our shifts and locations wasn’t feasible.  It also wouldn’t address elder care.” says Joe Bartz, VP of Operations.

A lifestyle benefit account was considered.  However, this is a broad account without any tax benefit for OEM Team Members.  In addition, OEM already has a wellness benefit – reimbursing Team Members for gym memberships, sports dues, etc.

The Bottom Line: OEM concluded that making company contributions to a dependent care FSA was the best fit for them and their Team Members for two reasons.

• First, the administration of the benefit was straight forward. Qualifying guidelines are already managed by the FSA administration, which eliminated the need for OEM to create guidelines and manage the reimbursement process.
• Second, in OEM’s case, Team Members already had access to a dependent care FSA account, meaning OEM did not have set about creating access from square 1.

The Details:

• Contributions to dependent care FSAs are tax-advantaged up to $5,000 a year.
• OEM’s new dependent care FSA plan includes a $2,500 annual contribution made by OEM. Team members can match these monthly contributions to realize tax-savings up to the $5,000 cap.
• The OEM portion of money deposited into the dependent care FSA is arranged as a “use it or lose it” for Team Members, meaning that should a Team Member not utilize the funds, OEM retains them, limiting the benefit’s budget impact.

In Summary: a dependent care FSA turned out to be the right option for OEM to help defray the costs of child care for their Team Members. The benefit serves, also, to strengthen OEM’s offerings in the market place as they compete and retain talent.