Many parents struggle to pay for childcare. It has long been a cliche that parents need childcare so they can work. Yet, a substantial part of earnings is spent on that very childcare — up to 10 percent or more of the average parent's household income.
This problem is increasingly addressed with the implementation of various agency programs, co-pays, and subsidies to help these families provide quality childcare for their children throughout the year.
There are many types of programs at the federal, state, and local levels, including tax credits, military discounts, and more. However, keeping track of co-pays and agency payments can be difficult for your childcare business administration.
Below is a drill-down of different types of agency payments and subsidies that may be available to your clients. EZChildTrack has always helped automate agency payments, but now we have improved the feature to help you and your clients streamline third-party payments.
Government Programs and Subsidies
Also called voucher programs and fee assistance, subsidies are available at all levels of government — federal, state, and local.
At the federal level, the Department of Health and Human Services administers a vast amount of federal child care assistance. Local county HHS departments help parents determine eligibility and point them toward the appropriate programs.
HHS manages the most extensive direct childcare program for low-income families. Funds come from the federal government and the state, and the funds are managed at the state and county level. Aid eligibility and availability vary by state. Many have strict income guidelines. Often, an age limit applies, sometimes as low as 13 years old (higher if the child has a disability).
Most government programs are administered as Child Care and Development Block Grants. Some states provide funding through social or health departments or agencies.
Start with the county Department of Health and Human Services. Also, look here for each state’s assistance policy.
Other programs provided by the government include Head Start and Early Head Start. The state may have additional subsidies available. If one or both parents serve in the U.S. military or work for the Department of Defense, they may be eligible for a military discount as determined by each branch of the service or agency.
Parents can learn more about military fee assistance at Child Care Aware of America.
Technically, tax subsidies could be considered government subsidies, but they are handled differently. In this case, the parents receive a tax credit or other break on their federal (and possibly state) income taxes to defray the costs of raising a child.
Child and Dependent Care Tax Credit
Working families with children can apply for a tax break by itemizing up to $3,000 in childcare expenses per child (to a $6,000 maximum) when they file their federal income tax. A child is an individual under the age of 13 at the time the care was provided.
Child Tax Credit
Currently, the federal government provides up to a $2,000 credit per child under the age of 17. The amount is reduced according to an earnings table, but a large number of families are eligible. The credit is money paid to the parent for child care assistance rather than a reduction in taxes.
Employer Subsidy Programs
Flexible Spending Accounts
Many employers offer flexible spending accounts or dependent care accounts parents can use to withhold pre- or post-tax funds for childcare and other dependent care. Families where the parents work and have children under 13 may be eligible.
Parents can set aside up to $5,000 in pre-tax income in an FSA to help with childcare expenses.
Larger employers can set up a childcare network program that offers a discount for families who use a childcare provider with an established relationship with the employer. The company's human resources department has the information.
School Sponsored Subsidies
Some schools offer financial assistance for childcare if one or both parents are students themselves. The college or university may establish a relationship with local childcare facilities or provide on-campus care at discounted rates for students.
Individual states also offer grants for degree-seeking students. The name of the organization distributing the funds differs from state to state. Information is available from the school.
Native Hawaiian, Native Alaskan, and American Indian Programs
Childcare grants are available from the federal government for many tribes and tribal organizations. The groups receiving funds are termed “grantees.” Tell parents who are American Indian and Alaskan Native to look for tribal grantees for the state. Head Start and Early Head Start programs are also offered for these groups.
Native Hawaiian families can access childcare and preschool programs if the children are Native Hawaiian or of Native Hawaiian ancestry. Families can contact the local PATCH organization.
Your childcare business or afterschool program may offer sliding fee scales or sibling discounts to reduce parents' costs.
Your community or municipality might offer local assistance as well in the form of scholarships and other funding.
EZChildTrack Agency Payment and Co-Pay Feature
Keeping up with billing, invoicing, and payment is a challenge for all childcare programs, especially when your clients receive third-party financial assistance. The more you can automate the process, the more likely you receive full payment between the parents and their financial aid agency.
EZChildTrack allows you to set up each client’s account with a co-pay or agency payment that automatically receives the funds, applies them to the correct account, and bills the family for the correct remaining amount.
The system generates an itemized invoice showing the third-party payment, any other fees (such as late pickup or late payment fees), and the amount owed.
The solution is prepared for payments from the Department of Health and Human Services and other third-party payments and co-pays. Each account and agency payment responsibility are tracked independently.
If your organization provides childcare for families who qualify for subsidies, EZChildTrack makes it easy to monitor those payments without losing any through the cracks. Your parents are always billed the correct amount, and your accounts receivable and revenue stream become calm waters.
Contact EZChildTrack to learn more about our Agency Payment and Co-Pay feature.