Date of Adoption: October 14, 2001.
Purpose: The department is amending the dependent care assistance salary reduction program (DCAP) rules. The department is repealing all existing DCAP rules (WAC 415-610-010 through 415-695-040), and replacing them with new rules in one chapter (chapter 415-600 WAC). The Department of Retirement Systems (DRS) is also putting the rules into plain English, and making some housekeeping changes such as changing the names of headings to make it easier to find information. No substantive changes are being made.
Citation of Existing Rules Affected by this Order: Repealing WAC 415-610-010 through 415-695-040.
Statutory Authority for Adoption: RCW 41.50.050(5), 41.04.600 through 41.04.645.
Other Authority: 26 U.S.C.
Adopted under notice filed as WSR 01-17-057 on August 14, 2001.
Changes Other than Editing from Proposed to Adopted Version: WAC 415-600-240 corrected as follows: "does not apply to relatives" moved from subsection (8) to subsection (9).
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 25, Amended 0, Repealed 40.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 25, Amended 0, Repealed 40.
Number of Sections Adopted Using Negotiated Rule Making:
Pilot Rule Making:
or Other Alternative Rule Making:
Effective Date of Rule: Thirty-one days after filing.
October 14, 2001
DEPENDENT CARE ASSISTANCE SALARY REDUCTION PROGRAM
(2) Dependent care expenses means amounts paid for services which, if paid by the employee, would be considered employment related expenses under Internal Revenue Code Section 21 (b)(2) and WAC 415-600-310.
(3) Eligible employee means state of Washington employees, officers, and elected officials.
(4) Employer means the state of Washington.
(5) Incurred expenses means expenses for services that have already been provided.
(6) Internal Revenue Code (IRC) means Title 26 of the United States Code (U.S.C.). Reference to a specific provision of the code includes such provision, any associated regulations, and any comparable provision of future legislation that amends, supplements, or supersedes such provision. Copies of the applicable IRC sections are available in law libraries and from the department of retirement systems (DRS). You can also obtain them by searching United States government references on the Internet.
(7) Participant means an eligible employee who has submitted a DCAP salary reduction agreement that is approved by DRS.
(8) Program means this dependent care assistance salary reduction program (DCAP).
(9) Plan year means January 1 through December 31.
(10) Qualifying person means:
(a) A dependent of the participant who is twelve years old or younger, for whom the participant is entitled to a deduction under IRC Section 151(c); or
(b) A dependent or spouse of the participant who is mentally or physically incapable of self-care; or
(c) A child of a divorced or separated participant, who is twelve years old or younger, if the participant has custody of the child, even if the participant has released an exemption under IRC Section 152 (e)(2).
PARTICIPATION AND TERMINATION
(2) SRA forms are available through DRS or its web site at http://www.wa.gov/drs/forms/.
(3) You may enroll in DCAP:
(a) During the open-enrollment period;
(b) Within sixty days of becoming an eligible employee; or
(c) At any time you have a qualifying change in status as set forth in WAC 415-600-240.
(4) The open enrollment period is the month of November for the following plan year.
(5) The enrollment process is complete on the date DRS approves your completed SRA.
(2) The agreement must contain:
(a) Your Social Security number;
(b) The names and birth dates of the dependents you will cover with DCAP; and
(c) Medical, family and other information DRS needs to administer DCAP.
Except as provided in WAC 415-600-230, an SRA agreement cannot be changed.
(2) Divorce or legal separation;
(3) Death of a spouse or dependent;
(4) Addition of a dependent to the eligible employee's household, such as the birth or adoption of a child;
(5) Termination of spouse's employment;
(6) Employment of an unemployed spouse;
(7) A change in the work hours of the eligible employee or spouse that significantly alters the need for dependent care;
(8) A change in dependent care provider;
(9) A change in dependent care provider cost (does not apply to relatives); or
(10) No longer use dependent care services.
(a) Two thousand five hundred dollars, if you are married and filing separately; or
(b) Five thousand dollars, otherwise. However, the total set aside by you and your spouse may not exceed five thousand dollars.
(2) If you are not married, the amount set aside may not exceed your earned income.
(3) If you are married, the amount set aside may not exceed the lesser of your earned income or your spouse's earned income.
(2) If your spouse is either a full-time student or physically or mentally incapable of self-care, your spouse's earned income is deemed to be:
(a) Two hundred dollars per month, if you have one qualifying person for whom care is provided; or
(b) Four hundred dollars per month, if you have two or more qualifying persons for whom care is provided.
(2) The amounts set aside by highly compensated employees who are subject to the particular nondiscrimination requirement shall be decreased pro rata.
(a) December 31 of the plan year, unless you reenroll during the open-enrollment period;
(b) The date you refuse a request for updated information, as set forth in subsection (2) of this section;
(c) The date the program is terminated by state or federal action; or
(d) The date you revoke your salary reduction agreement under WAC 415-600-230.
(2) You shall be deemed to have refused a request for updated information thirty days after a letter requesting such information is mailed to you by certified mail, return receipt requested. The letter must notify you of the consequences of a failure to provide such information.
DEPENDENT CARE EXPENSES
(a) Only expenses incurred on days you work may be reimbursed.
(b) If you are married, only expenses incurred on days you and your spouse both work may be reimbursed, provided that:
(i) If your spouse is a full-time student, expenses incurred on days you work and your spouse attends school may be reimbursed.
(ii) If your spouse is physically or mentally incapable of self-care, expenses incurred on days you work may be reimbursed.
(2) You may be reimbursed only for expenses incurred during the plan year for which you are enrolled. If you enroll after January 1 of the plan year, you may be reimbursed only for expenses incurred from the date DRS approves your salary reduction agreement.
(3) Only the cost of care may be reimbursed. The following expenses may be reimbursed, subject to the limitations stated in subsection (4) of this section.
(a) Expenses for care of a qualifying person in the participant's home, including feeding, administration of medicine, general supervision, and incidental household services; and
(b) Expenses for care of the following qualifying persons outside the participant's home:
(i) A dependent of the participant, age twelve or younger, with respect to whom the participant is entitled to a federal tax deduction.
(ii) Any other qualifying person who regularly spends eight hours or more per day in the participant's home.
(4) The following limitations apply to the reimbursement of expenses:
(a) Expenses for food, clothing, and entertainment are reimbursable ONLY IF these expenses cannot be separated from the cost of care.
(b) Expenses for care in a dependent care center (as defined in Internal Revenue Code (IRC) Section 21(b)) are reimbursable ONLY IF the facility complies with all federal, state, and local laws and regulations.
(c) Expenses for schooling are reimbursable ONLY IF:
(i) The schooling is at a prekindergarten level; and
(ii) The expenses cannot reasonably be separated from the cost of care.
(d) Payments to a person for whom you or your spouse may claim a dependency exemption for federal income tax purposes are not reimbursable.
(e) Payments to a nondependent child, as defined in IRC Section 151 (c)(3), are not reimbursable unless the child will be age nineteen or older by December 31 of the plan year.
(f) Summer camp expenses, when the child stays overnight, are not reimbursable.
(g) Amounts paid by an employer of your spouse or by an educational institution where your spouse is enrolled as a student are not reimbursable.
REIMBURSEMENT OF DEPENDENT CARE EXPENSES
(2) DRS will mail a supply of reimbursement claim forms to you upon confirmation of your enrollment. You can obtain additional forms by phone or on the DRS website, at http://www.wa.gov/drs/forms/.
(3) You may submit reimbursement claim forms as often as you wish.
(4) The reimbursement claim form must be completed, signed, and accompanied by bills, invoices, receipts, or a statement signed by the provider. The department cannot accept canceled checks or credit card statements as verification. All documentation must show the amounts of dependent care expenses and periods of service for which you seek reimbursement.
(5) DRS must receive claims for expenses incurred during a given plan year on or before March 31 of the following year.
(2) If funds are available in your dependent care account at the time the claim is reviewed, DRS will reimburse your claim.
(3) If funds are not available at the time your claim is reviewed, DRS will reimburse your claim when money becomes available in your dependent care account. You do not need to resubmit your claim.
(4) You will not be reimbursed for claims that exceed the amount that you set aside for the plan year. You may not resubmit these claims in subsequent plan years.
(5) Unpaid expenses are never your employer's responsibility.
(2) Shortly after March 31 following the close of a plan year, DRS will send you a written statement showing the reductions from salary and amounts reimbursed through the end of the plan year.
(2) Delegation of authority: DRS may delegate functions to be performed under this program to any designee with legal authority to perform such functions.
(3) Reliance upon documents: DRS and the employer may rely upon any document believed by them to be valid.
(4) Reliance on information: In administering the program, DRS may rely conclusively on all tables, valuations, certificates, opinions, and reports which are provided by its accountants, counsel, and other professionals.
(5) Binding nature of decisions: The DCAP program administrator is authorized to decide any matters concerning your rights under DCAP. Such decision shall be binding. If you disagree with the decision, you may write to the DRS director for consideration.
(6) Program amendments: DRS may amend DCAP at any time if the amendment does not affect the rights of the participants to receive eligible reimbursement.
(7) Communication: DRS will provide reasonable notification of the availability and terms of the program to eligible employees.
(8) Program document: The DCAP program document consists of chapter 415-600 WAC and RCW 41.04.600 through 41.04.645.
(2) The establishment of any administrative practice shall not vest you with any right not expressly provided by DCAP.