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Yarmuth Announces Legislation to Save Money for Working Parents

UPS, Humana join Congressman in support of bill

(Washington, DC) Today, Congressman John Yarmuth (KY-3) announced that he has introduced H.R. 2298, the Expanding Dependent and Child Care Act of 2009.  The legislation would increase the Dependent Care Flexible Spending Account (DCFSA) limit by 1/3 to $7,500 for multiple dependents and 3,750 for single filers – up from $5000 and $2500 respectively - and then index the cap to inflation in subsequent years.

"This legislation will offer some much-needed child care assistance to working families and help businesses retain a strong and productive workforce,” Congressman Yarmuth said.

Congressman Sam Johnson (R-TX-3), who introduced the bill with Yarmuth said, "Raising children is tough enough, especially in these difficult economic times. This common-sense bill provides some help for parents who are working hard and trying to do the best for their kids.”

A DCFSA is a tax-advantaged financial account that can be set up through an employer.  It allows an employee to set aside a portion of his or her earnings to pay for dependent care expenses of a child or elderly dependent. Money deducted from an employee's pay into a DCFSA is not subject to payroll taxes, resulting in a substantial payroll tax savings for the employer and employee.

The current DCSFA caps have not been raised since 1986, and the strength of the dollar is about half what it was then.  H.R. 2298 would index the new caps for inflation to avoid weakening the provision again in the future.

Currently, 60 percent of children under age six have two working parents, and nearly 40 percent of all working families care for older dependents.  These families could save hundreds of dollars each year on thousands of dollars in dependent care bills.