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Going Virtual: The future of child care during COVID-19?

child care during COVID-19

Child care during COVID-19 has been one of the most discussed topics after the pandemic itself, alongside shifting work environments and how companies and the economy are responding.

Many parents are expecting to go back to work in offices, albeit a limited number of days a week in some cases, when the last quarter of 2020 rolls around. Inevitably, some companies and parents, both eager for a solution, are carefully weighing the pros and cons of new solutions, such as virtual care.

So what options will parents be afforded when it comes to finding child care during COVID-19 as the remainder of 2020 stretches ahead?

What child care during COVID-19 may look like in late 2020

Option 1: Virtual Care

Let’s start by saying “Virtual Care” is a new and evolving concept. At the basic concept, virtual care is generally video-enabled services which provide entertainment, education and/or interaction with a child. The intention is that it would keep the child occupied while a parent is attempting to work remotely. However, there is no handbook or guidance that outlines what virtual care means. There also is no flashing sign that says it would be an eligible expense under a Dependent Care FSA. Thus, the debate begins.

At the August ECFC Symposium, representatives from the IRS acknowledged they are aware of the concept of virtual care. However, they declined to comment at this time.

Further discussions among industry specialists, outlined that eligible childcare must ensure the care and safety of the child. While virtual care might keep a child’s attention while a parent is working from home, it is hard to demonstrate how these services would ensure the care and safety of the child.  Without explicit guidance from the IRS, virtual care is not generally considered an eligible expense under a Dependent Care FSA.

However, the debate continues. Some arguing that virtual childcare could go beyond video-based interactions. As these services evolve, virtual care may include monitors and notifications. The monitors would be similar to a heart rate monitor, where parents can check in every so often that the (mostly unsupervised) child was healthy and happy. In a similar way, a notification system would alert parents to the child’s whereabouts and activities, providing assistance, rather than full on surveillance.

At this time, there is not enough guidance to permit virtual care services. As option one seems unlikely to become a reality in short order, what is option two?

Option 2: New laws on child care

Newly proposed legislation would modify child care rules and resources. H.R.7327 – The Child Care and Economic Recovery Act, already approved by the House, would make several changes, including:

  • raise the current Dependent Care FSA annual limit from $5,000 to $10,500
  • have the limit increase with inflation each year
  • allow Dependent Care FSA funds to be carried over from the 2020 plan year into the 2021 plan year

The bill waits review by the Senate. While it is unclear if the Senate will take up the legislation, there is hope as the bill had bi-partisan support in the House and provides much needed support for essential workers.

What if the law passes?

If the law passes, employees will not automatically be allowed to take advantage of the changes above. Employers must adjust their plan documents to allow for the changes.

We’ll be monitoring this story as it develops, so be sure to subscribe to our newsletter for updates.

Read more about how employees can save on child care costs and the impact of COVID-19 on companies offering pre-tax accounts: