Celebrate with us as we hit a podcast subscriber milestone—it's a jovial start with a personal twist, discovering that our car choices are as identical as our mission to dissect critical issues! After a little banter, we steer the conversation to a topic close to many hearts and homes: childcare support for working parents. We revisit Indiana’s impressive initiative, which dished out $18.1 million in childcare subsidies, and we unpack the ripple effect this has on families and their livelihoods. And that's not all; we also sprinkle in fun facts like our car coincidence that'll have you chuckling in between the serious discussion.
Our journey through this episode takes us from light-hearted personal anecdotes to the heart of what it means to be a frontline worker juggling family and financial responsibilities. We examine the role of organizations in lifting some of this weight with financial benefits that extend beyond the paycheck, including the specifics of Dependent Care Assistance Programs. While DCAPs may sound complex, we demystify them and propose innovative solutions and direct stipends that could bring immediate relief to those in need. Tune in for an episode that combines the warmth of shared experiences with a deep dive into the policies and programs that could reshape the future of working families.
Keep in mind, this is not tax advice. We are sharing what we know. Please do check with your accountants and tax team. Thank you for listening!
Thank you for joining us on 'Tax Break Breakdown'! If you found our deep dive into Indiana's childcare benefit program insightful, please consider subscribing for more valuable discussions. For further information, questions, or to share your experiences with childcare benefits, DM Doug or myself here on LinkedIn. Stay tuned for our next episode, where we'll explore more current and upcoming childcare grants and tax programs employers can take advantage of. Don't forget to leave us a review and share this episode with your colleagues. Together, let's make the most of workplace benefits and tax breaks!
Celebrate with us as we hit a podcast subscriber milestone—it's a jovial start with a personal twist, discovering that our car choices are as identical as our mission to dissect critical issues! After a little banter, we steer the conversation to a topic close to many hearts and homes: childcare support for working parents. We revisit Indiana’s impressive initiative, which dished out $18.1 million in childcare subsidies, and we unpack the ripple effect this has on families and their livelihoods. And that's not all; we also sprinkle in fun facts like our car coincidence that'll have you chuckling in between the serious discussion.
Our journey through this episode takes us from light-hearted personal anecdotes to the heart of what it means to be a frontline worker juggling family and financial responsibilities. We examine the role of organizations in lifting some of this weight with financial benefits that extend beyond the paycheck, including the specifics of Dependent Care Assistance Programs. While DCAPs may sound complex, we demystify them and propose innovative solutions and direct stipends that could bring immediate relief to those in need. Tune in for an episode that combines the warmth of shared experiences with a deep dive into the policies and programs that could reshape the future of working families.
Keep in mind, this is not tax advice. We are sharing what we know. Please do check with your accountants and tax team. Thank you for listening!
Thank you for joining us on 'Tax Break Breakdown'! If you found our deep dive into Indiana's childcare benefit program insightful, please consider subscribing for more valuable discussions. For further information, questions, or to share your experiences with childcare benefits, DM Doug or myself here on LinkedIn. Stay tuned for our next episode, where we'll explore more current and upcoming childcare grants and tax programs employers can take advantage of. Don't forget to leave us a review and share this episode with your colleagues. Together, let's make the most of workplace benefits and tax breaks!
Welcome to the Tax Break Breakdown with your hosts, greg and Doug. Sit back and relax while they review current and upcoming childcare tax credit programs employers can take advantage of.
Speaker 2:Now on to the show the dog howling is going to start like this. Welcome everybody to episode 4 of the Tax Break Breakdown with your hosts, greg and Doug, now known as Grug. Today's episode we are titling childcare subsidies or stipends. They're both used interchangeably taxable or tax-free. That middle part is not part of the title, so it's episode 4, childcare subsidies or stipends, taxable or tax-free. I did our last count Doug list. We have crossed the 50 podcast subscribers 49 more than you thought.
Speaker 1:See how many email addresses my mom signed up with.
Speaker 2:And 453 subscribers to the newsletter on LinkedIn, which I didn't think it'd get to 453 that quick. That's pretty cool. I wonder who they are. I don't know.
Speaker 1:I'll have to check them out.
Speaker 2:That's pretty cool to see. I really want to dig in to see how many people do we work with signed up and how many friends and family signed up, but I know that there's some people that have never heard of us, and maybe they sound us through LinkedIn, or maybe now we're on Apple Podcasts, we're on Spotify, we're on Google or an iHeart radio. We're on like 10 different ones. This is definitely a resume, though. Published across all podcast platforms.
Speaker 1:Your distribution skills are fantastic. I appreciate that. It's all you, it's not me.
Speaker 2:I know, but let's get into the grug fact. What you take this one again. You've been taking them, so grug fact.
Speaker 1:Yeah. So this one, wow, it took us. We had our like enlightening moment where we found out a lot of details, but this one took us a little bit longer. But we have at least our wives drive, but we own the same cars. Black Cirentos Was a good choice. Then they haven't gotten stolen, so that's good. But definitely some issues recently around that Long term the wisest choice. We'll see what happens when insurance renewals come around. But yeah, the same year color model. Yeah, surrender Liz and both of our grugies. That's crazy.
Speaker 2:Hey, this crazy. I think next year we may trade it in for the key of carnival. Have you seen that one Kind of looks like?
Speaker 1:a. Cv minivan Bigger bigger, bigger third row Right yeah.
Speaker 2:Yeah, it's not the one that has the. There's a minivan that has a vacuum cleaner in it, like any, like car.
Speaker 1:It's like Pontiac Aztec levels of convenience.
Speaker 2:You just have a cooler. Yeah, so that's the grug factor. Today we got a couple more. I forget the last episode. We came up with another one, but just weird things that I don't know Coincidence, destiny, I don't know yeah. Let's jump into the news. We got a couple news things for the industry Childcare wise, benefit wise, the first one being a call back to our first episode, which is crazy to say, right.
Speaker 1:First, episode yeah, first episode.
Speaker 2:Now we're on number four.
Speaker 1:Four out of four, this is it.
Speaker 2:Yeah For the way thought For those that are on our YouTube channel, which I didn't bring that stat into it, but we have two subscribers.
Speaker 2:Let's do more than I thought. I want to show for those that are, but those that are on YouTube I'm going to show here. So we're calling that to first episode. We talked about Indiana. They were given $25 million away, like we did the episode and we were like, hey, you have a week to apply. Part of that episode was also like hey, childcare is a problem, why isn't the government doing anything about it? And we were like they are doing something about it and it's real and I'm showing on the screen the company that got approved. I don't think it totals up to $18 million. I thought it was $25 million, $18.1 million, 64, but here are some of them and you'll see here Plymouth Community Schools they got $350,000. In Marshall County. Avanti Group, which I think is hospitality I think I came across them in one of my past gigs $349,000. Navarre Hospitality Group $200,000. United Way of Marshall County $750,000. What else here? Report Day, community School.
Speaker 1:Which one American Licorice Company?
Speaker 2:Where do you see that one?
Speaker 1:American Licorice Company. It's right above the card.
Speaker 2:American Licorice Company $200,000. Are you a liquorist man?
Speaker 1:I mean, if they're supporting working parents, I can be.
Speaker 2:Did you know that American Licorice Company is like Sour Patch? Way really red oh wait, sorry, not sour patch, sour punch our punch.
Speaker 1:Yeah, but I'm here for those two.
Speaker 2:Yeah, now I'm red vines are my red vines. The box, the big one from Costco, yeah yeah, yeah, so one next time I get, specifically because of this now okay, so isn't this cool to see 18.1 million dollars, 64 organizations and there are, like we talked about this, the application was like super simple and they got 750,000, 490,000 and this was the one that could go towards offering on-site childcare, reserving childcare seats A ton of different stuff.
Speaker 1:I mean really, it was basically if it's childcare related and for your employees it qualified. Wow, it's amazing to see. But it's also like how crazy is that turnaround at month? Right, yeah, it was about a month, right?
Speaker 2:Do you think they already knew?
Speaker 1:I mean I'm sure some some of the applications were in early, like things were fast-tracked. But I mean we talked 25 million dollar pool. I mean how many times have we seen some of these funds pop up right and they don't get used at all? Right, it was 25 million dollar fund. Even 18.1 million like is like fantastic utilization on that front. Yeah, forget about money, or so I mean it's. It's really exciting, that's it's. It's great when we see it go quick, right, like yeah, here's the application, we're gonna get it hands, we're gonna make it impact fast. And I think that's part of you know the program being broad, so not shocked by it because like it was structured so well and probably for out for employees, but it's really cool to see it turn around that quickly.
Speaker 2:I don't think we've ever seen something turn around that quickly not that quick, but the CHIPS Act I think we talked at. One of their episodes about a company was there was like another company that got a good amount of money. There was another announcement that was 17 hours ago for 162 million. If you can guess the company, I will buy you a tub of licorice.
Speaker 1:Don't look it up right, that's, I don't okay if I guess it, you gotta buy me, you guess it, you guess what you know, and I will buy you licorice okay microchip technology.
Speaker 2:They got a hundred and sixty two million dollars basically to expand the facilities in Oregon and Colorado. They do microcontroller unit, other critical technology, and the goal is to impact the industry, local communities and create 700 jobs. That's interesting though 162 million for 70 700 jobs we did.
Speaker 1:But is that just at the plan? Because I know that the chips ask act as a whole, right like you have the support, construction and things like that, so maybe it, maybe it's not factoring into that total number.
Speaker 2:Yeah, that's cool to see, because this was launched last year and now look, oh, and actually two, but about two years ago because we've talked to a couple big chip companies and their applications are still being reviewed. So but this is the second one in the three-digit million it's.
Speaker 1:It's starting to get through right, and I think that that's the exciting piece of it is there's a lot of waiting. The chips act, especially around chomp Karen. That actually starting to get through now is exciting that's.
Speaker 2:It's crazy how many dollars are there. I'm trying to get into our next one, which is benefits pro. For those that are not familiar, benefits pro really cool website. You can guess what it's for for benefit professionals. But this article, obviously it's January and so everybody's coming up with their predictions for the year. Right, yeah, everybody's doing their shake weights, everybody's getting back into the treadmills, everybody's trying to get meals.
Speaker 1:Is that treadmill, oh, treadmill.
Speaker 2:I heard treadmill walking and well, it's recorded, we can go back if we need yeah.
Speaker 1:I tried.
Speaker 2:Well, we can go back to see if I had said it wrong or right, but this one is interesting. They gave a couple predictions. Earned wage access is interesting, obviously like improving the employee experience. That's like has always that's been there for a while, but the one that we're interested in.
Speaker 2:I'll read it in 2022, we expect employers to continue to prioritize financial benefits, starting with emergency savings. That is great, because there are a ton of stats that say employees, especially frontline workers, can't even afford like a $400 bill yeah, an emergency. Increasingly, employers and providers will emphasize less traditional financial benefits, particularly student debt repayment and caregiving. That's where childcare comes in and far-sighted leading employers will begin to think beyond employees near term financial security toward long-term wealth building and the ways employers can enable wealth creation outside of a retina plan, which reminds me of a startup that's coming up called Salt Labs.
Speaker 2:I've seen them and they're revolutionizing this idea that frontline workers traditionally they work, but they don't really reap the benefits only through a paycheck. They're already living paycheck to paycheck. In fact, I think the stat was they were spending 102% of their income a year, so they have nothing. You think about how many hours a full-time waitress works and then at the end of the year, they have negative to show for it, and so they're designing this idea of converting like a loyalty program, like Miles, but into employees, and supporting them with turnover. I didn't do the fascinating concept, but this is. I sent this to the founder. I'm sure he's well aware of it, but it is so fascinating that companies are gonna start to think about how do they help employees build long-term wealth in the way that this one is set up. It's interesting on how they do it. I can't wait to see how that plays out.
Speaker 1:Yeah, I know we've spoken around a little bit. I think it comes down to it is hard right now to attract and retain frontline workers. For all of these reasons, right, Baseline security, long-term wealth, family planning, home ownership all of these things are getting harder and harder, right as generations come through. And it's where does that responsibility lie? And part of why we started this is like where are the breaks, when are the things that we can leverage to make an impact in those populations? Because it's not getting easier? We keep like the reason, so I'll create example. Right, Don't care giving space. You look at even student debt repayment, like these are huge systemic problems that maybe we'll get around to solving as a country one day, but in the moment, right, what can we do in the meantime and how can it impact organizations that need it to impact their employee base?
Speaker 2:Yep, well, that is one of their predictions here, or holistic approach to financial benefits, and so they're including caregiving as part of a holistic approach. I mean, when we look at share of income, I mean I think the last report we did what was the share? There was an analysis we did in, like some rural areas, the share of childcare expense to like monthly income was a 25, 30, something percent 5, 30%, yeah, so how? Do you process that?
Speaker 1:So that's one kid, right, that's one kid there's like this is a narrow view, right, like this is in like holistic financial benefits, but we look at the impact, especially you get into like social determinants of health, right, okay, it's like long-term community stability, like all of these things that we talked about. We talked about like rural areas, again right, like a mad upset. It's like there's so many benefits to putting these things in place that are beyond just the dollars of it.
Speaker 2:Yep Next in the news before we get to our main topic here. This one's an NPR Title is Tackle Poverty. More States Will Offer Bigger Childcare Child Tax Credits in 2024.
Speaker 1:So I believe.
Speaker 2:What does that mean?
Speaker 1:It means we're gonna have more episodes.
Speaker 2:I hope there's at least. Let's see if we do one a week, four a month, 40, 48, yeah, there's enough if each state does it. Finally, but this one's interesting right, because these are gonna be at the state level. There are still the IRS formated A2, which is at the federal level, and then federal funding is also going to state to distribute. They do a lot of this on supply building. They do a lot of programs to help support child care centers, like that.
Speaker 2:Money flows from the federal to the state, to the counties and cities, and then there's the federal tax credit and then, on top of that, now states are doing this. So New York was one of the latest where they are basically kind of matching that 150,000, but they're doing it on the state income tax level. So there's like so many layers to this which is really interesting this article talks about. Vermont is one of the 14 states that now have a child care tax credit. 10 of them have either created or expanded the benefit in 2023, 11 states offer the full credit to families with the lowest or even no income. Some state credits are available for immigrants, even those without legal status. Vermont made that change to help the migrant workers who are the backbone of the dairy industry, and so this is also talking about tax credits at the employee level. There's like so many levels of tax credit. Somebody should just put all of this together, don't you think?
Speaker 1:They never crossed one line.
Speaker 2:We certainly have not talked, never crossed your mind. Well, we have.
Speaker 1:Yep, I did that. I was here multiple times.
Speaker 2:Yeah, the cool thing I mean about this sort of expanding these benefits in states has bipartisan support Interesting. I mean it's a bit more of the interesting.
Speaker 1:So I know, looking at it, we've seen it in blue, red, purple states. Right, like there's it's a problem that crosses party lines. Right, everybody's got kids and everybody needs to work and most people they just need to work. And like it's tough. Right, the rural metro, whatever it is, it's difficult to afford it, especially when we get into frontline workforces, and so that kind of feeds into what we're talking about today is okay, you're going to support as an employee. You're gonna support tuition, right, child care, tuition for your employees In some way, shape or form.
Speaker 2:I mean, that's the first, that's one of the first questions you gotta ask yourself. So what extent? What's our role gonna be right In this, in the solution, and should your role include helping your employees financially, which is really the first thing you need to tackle?
Speaker 1:Yeah, then it's like okay, do we just?
Speaker 2:do we just give people money? Like what do I give them money? Is it taxable, is it not taxable? You and I are on the opposite sides of this one.
Speaker 1:A little bit. I mean it's value. I think we process it different ways, right, and what we're gonna look at is right is there's ways that it can be taxable right Imputed income to the employee and obviously effect payroll taxes on the employer side, and there's ways to avoid that. But there's catch right.
Speaker 2:There is a catch.
Speaker 1:There's a catch. So I tend to be more in the camp of let's be broader and focus on the support rather than the potential savings. Doing so Because I think the ROI is so significant, but you would be on the other side of hey, there's a way to save money here and that gets quite excited I'm.
Speaker 2:I advocate for getting funds into employees' hands, but if there's a way that you can even make that those dollars go a little farther, that's where you got my attention, so we're gonna talk about how you could do that, yeah. So what is one thing that almost every employer has that only about 1% of employees use?
Speaker 1:Well, I can say what I was going to say, but are you talking about a dependent care FSA?
Speaker 2:A decap account, yes, dependent care account, similar to an FSA, hsa, but for dependent care. And keep in mind dependents are not just children, they're also elders and so some of the benefits. So let's say I'm an employer and I'd like to give employees $5,000 to go towards child care. So you have a couple options just give it to them directly, or one option is you can put it into a dependent care account. Why you could do that there's a lot of different reasons, but two primary ones it's not, it's untactable and come to the employee. So $5,000, right, if you're taking up 30%, hit, it's not a lot of front line, that's $1,500,. Basically, you would save in taxes if you're paying 30%. But then also for the employers that are listening, you pay FICA taxes on that. But in this case, if you gave $5,000, you actually wouldn't pay FICA taxes on that $5,000. So you would save about $380. And that's the area that I think is fascinating that this can create a win-win for the employee and the employer, but not a lot of people are thinking about it.
Speaker 1:There's cons to it, which I can hear.
Speaker 2:I can hear.
Speaker 1:I mean they. That's a no brainer.
Speaker 2:We can save money on both sides of it.
Speaker 1:Why is it 1%, then? Right, if every, almost every employer has a, why is it 1%, right I?
Speaker 2:know why? Yeah, so well, there's a couple of different reasons. First of all, you can only elect for a decap during open enrollment. That's one time a year. A year, unless you have a life change event. And, by the way, there's ways to qualify for a life change event that many people don't know. I'm not going to get into it, I don't know the full rules around it, but I think, like moving is moving, was moving one like there's more right.
Speaker 1:There's something I remember. We looked into it like a couple of months ago you know first, really like circled around this in depth and there are ways right. The hurdles are the red tape around it, right. So there's when can you enroll? Right, and then there's what can you use it for? Right. Yes, you know this has very.
Speaker 2:The funding of it is an issue right.
Speaker 1:Yeah, but so most employers like they have them, but they're not funding them, right, so it's.
Speaker 2:Well, talk a little bit about that.
Speaker 1:when you say not funding them, yeah, so as an employer you can choose to fund a dependent care account right and you put that money in. The employee can use it right Towards tuition right Eligible benefits, whether it's for child, elder care right. Okay.
Speaker 2:On day one. That's the difference On day one.
Speaker 1:That's funded. But for the most part, employers don't fund that or maybe will contribute like a small amount or maybe a matching amount. And so what you're asking employees to do is to go out of pocket, right, and to save that money. Is a pre-tax deduction off of their paycheck? Again, there's a tax savings there, it's there. But then you have to submit right for that reimbursement and that reimbursement can only be used you know, when we talk about childcare, right, a licensed facility, or if you're using, like a nanny or a sitter, right, like, you know what I'm saying you have to have their tax ID. Right, there's very strict requirements on, like, what you're submitting to get reimburse. Yeah, and that goes with this. Right, I use mine. Right, and I'm glad to have it. Right, I funded myself.
Speaker 1:The last time I submitted a claim, it took me three weeks and going back and forth, right, again, we use a daycare facility, licensed facility, franchise, like the software struggles to even get out like a receipt that they have that has all of the information that the dependent care account provider needs. Right to do it. And so when you think about right, two things there, right, how long are you actually out that money? Right? Yep, is it pain, right, the burden of having to submit, get the receipt right, like there's an uptick there. Right, you have the narrow window right, or perceived narrow window. We know it's broader, like when you can actually enroll and then locked and it make changes to this. And then, right, we think about it through the lens of a frontline worker. Right, like being paycheck to paycheck and I can take myself back to those days and in working, you know talk about hospitality, working right, like you know serving, working behind the bar right, even busing right, and you know I needed every single one of those dollars.
Speaker 2:I know how that is.
Speaker 1:And so to ask somebody to put that aside, right, even for that right and especially right, you know we look at the studies we've done right and the assessments we've done. Frontline workers, vast majority, leverage their friends and family network that would try particularly not be eligible right, and I don't think it was a lot of people submitting, like grandmas right, or their mom's you know social security number to their FSA provider to get you know a reimbursement back on this. Can you do it? Yes, like, but does it have implications? It absolutely does, yeah, and that's we struggle with. It is like it is a great thing, but does it actually help the people that need it most? And I think, with how much red tape there is today, I have not seen, and I really hope to see it at some point, somebody can like really solve this right and make it like so turnkey that it will affect frontline populations, but to me it's just not there yet.
Speaker 2:Yeah, I think I think I'm living into the future because I can see how much better it could get and that's why I'm such a like. It's my entrepreneurial hat that's speaking where I'm like I can make this, I can make this better. But let's put it an example to this for those that might not know.
Speaker 2:If you as an employee elect $5,000, your basic and the employer takes it out basically per paycheck. So you're taking out about $416 from your paycheck, right? So $416 a month is going to go into this account. Your paycheck is already down for 16. Then you still have to pay for childcare that month. So now you're out and let's just say it costs $1,000. So now you're out $1,400 for that month. Then you have to get the receipt because the services have to be rendered. Then you submit it, right, and then you can get that $416 back. But by the time you get that money, then another $416 is taken out of your paycheck that month, right. And so it's like if frontline workers just don't have first, I don't think the companies that do decaps have great education around it.
Speaker 2:It's a very legacy product. There's a lot of like yes, they say, there's a lot of marketing and education. It's complicated to try to teach folks that you're going to put the money in now, you're going to save later, when you file your tax, which is a year away, you're still going to have to pay for childcare and then you can get a reimbursement. But that's okay, right, it's like, so complicated I think a one-way employer can make this easier is to treat it like an HSA and just pre-fund it on day one or and then, by the way, we've talked with the largest decap provider out there. There is no technology reason why this can't happen. They literally told me we just click a button and then there's no legal reason why you can't.
Speaker 1:It's an inertia thing. It's always just kind of been there. I think the HSA can send us off, because that's. I was actually working in the health insurance space when consumer directed plans came out and HSAs really kind of became a thing and you got to watch that evolution of this very lightly utilized piece that had been around, started getting up to it and companies found like, hey, we fund this. This is actually like it's a way to reduce medical costs right In our medical costs for benefits, but it also is a huge benefit to employees, right, and it works right.
Speaker 1:Especially, a lot of it was targeted more towards, initially towards younger, healthier people and the same demographics. You're going to be having kids, right, and it's like, hey, you don't have a ton of medical expenses yet. These are actually good plan designs for you and we're going to help fund some of that. Right, and we've seen it become much more standard right To see I deduct off plans or HSA eligible. There's been a ton of innovation, development to make that process smoother. Still a lot of legacy HSA providers out there too, where I've had similar experiences, but I've also seen some really clean stuff and great education for it. So I agree with, like, your future view right. This will get, I think, solved at a point and it will become easier and we will see companies adopt it. But we haven't. Why hit the apex like of that hill? I think it's still going to be a barrier and I think it's going to take time to filter down which really takes us more towards what I love, which is direct stipends, putting cash in people's hands.
Speaker 2:Well, before we jump into that one, I did want to. I still wanted to call out as an employer. I think they would get a lot more uptick if they'd pre-funded. So all employers just know to make it non-taxable to your employees and to make it basically non-taxable to you to not pay your FICA, just put it in, you can put it into a D-CAP account, but fund it on day one. Or we've actually seen employers do it per quarter.
Speaker 1:You can do that as well.
Speaker 2:But just don't require your employees to do it. There is a little bit of risk, right, like the model has been proven for HSAs, that you generally will come out ahead. You won't spend. I don't think it's been tested on the D-CAP account side, because people always need childcare, but not everybody needs healthcare on day one, right. So it would take some testing, but what we've seen on the turnover is that it's basically worth it. So this is a great way to take advantage, which is all about the tax break breakdown. Let's take advantage of it. So that's available, do that on day one. And then, yes, somebody which we've talked to, this gentleman before, tom Daley. He actually works at NFP. I know that he's working on. How do you make this easier for everybody, like for the employee, for the employer, for the childcare provider? There's some really cool things that I think you could do and I'm excited for it. Now let's jump into the other view of the taxable side.
Speaker 1:So if you want to give somebody money.
Speaker 2:If you want to give people money from an employer, obviously it's imputed income. Doug, talk a little bit about it.
Speaker 1:I am not a patient person at any facet of my life right. If I were putting this in place as an employer, I want to see the impact of it on those day one. Right, and the easiest way to do that is to take the restrictions away. It's part of what I loved about the Indiana program. Right, to go back to episode one and write the top of this episode right. It's.
Speaker 1:The broader it is, the shorter the time to impact, the quicker we're going to get relief into employees' hands and specifically those that need it the most, which is frontline employees, low wage hour employees right. Give them money right. Now, what that does is allows them to use it and leverage the totality of available childcare supply that's available. Let's go back to rural childcare. There's no providers, right. No licensed providers in an area. Right, they're all full. You could fund a decap and there's not even anybody eligible that you could utilize it. But if people are leveraging their friends and family network, we've seen programs where you can even leverage a spouse that's staying home right, I thought you were going to say diapers.
Speaker 1:No, I'm just saying.
Speaker 1:I'm really broad with it right and you can kind of treat it like a little bit more of an all-out setting and some of these things. And we focus specifically on care right, which I do think you could say, but it's going to have an impact. But for the most part, when we talk to employers, it's one of two things. Right, it's always turnout right, Turn of retention, right, Attraction retention, like all of that, but the one that really moves the needle right, we have these conversations right, this absenteeism right, I can't show up to work because I don't care. Right, and so, like, directly, funding.
Speaker 2:What employer is going to say you know it's a touchy subject I literally cannot come to work because I don't. It just creates this like hard decision for managers, for HR leaders, because, like you're empathizing Sometimes it's like when you have like and then the other side is like I just hand up, like it's such a hard like topic.
Speaker 1:It's incredibly difficult and the easiest solution to move the needle is give people money, right, like help, support it. Right, we talked about it. Right, you know, I think from again in the rural standpoint. Right, it's building the community. You know it's really building that profile. It's also, right now, massive differentiate as an employer when you look at impact, because not many do this directly.
Speaker 1:Right, and you know we focus on childcare, this other care, pet care too. Right, and that I think that's where you're seeing the benefit for our article is like this is actually a huge need. Right, the financial impact of these challenges and caregiving is growing year over year and it's not getting easier. Right, it provides, right, you know again where you know, the state tax credit, some of these things to help fund some of these programs. They're going to change. Like it's a massive opportunity for employers to differentiate right and attract retain.
Speaker 1:You know that they won't, especially in some of these, like front-line workers where we've had how do you become, right, more attractive as an organization, you know, for somebody who can walk down the street maybe make a dollar more an hour or the same wage, right, like it's a lot more power to you coming to a space in the tar. We've had those conversations. Now those are the pros, right, you can broadly define the program. They have incredible uptake. You know, we've launched some of these programs and we see 20%, 30% utilization just for childcare, right, the total employee population.
Speaker 2:Yep right Versus 1% for a decap.
Speaker 1:For a decap. Right Thinks it's a significant difference In today's numbers.
Speaker 2:I'm talking today. Right, Eventually right, we can make.
Speaker 1:We can put these things together. I think that's like. Ultimately, the goal is can we get this utilization with the tax savings at the end of the day?
Speaker 2:Yes, that is what we're talking about, the cons are taxable. Oh, here we go, it's taxable. I mean, that's a huge con.
Speaker 1:It is a huge con. But here's my favorite right Because again right I want like I look at this and I want it to be progressive. To me, a decap is regressive right. It's utilized typically by higher wage earners because they have the capital right.
Speaker 2:In today's room.
Speaker 1:Outdown lane Today's, not Greg's, future.
Speaker 2:I'm talking Greg's future world, but yeah.
Speaker 1:Okay, greg's future world may be different, right, but when we look at a stipend program, to me it's progressive, right, because the tax brackets aren't progressive. So our lowest earners, right, are going to pay the lowest amount of imputed income, right, yeah, on these stipends, so it's automatically progressive. Now, again, there's loss of that right that there's not even it's going like to the government, right, rather than the director there. So I get that piece of it, but it is a lot more accessible for families. But outside it is taxable. There's a little bit more of a burden, right. You know how you track those Well so let's put some numbers to this.
Speaker 2:So it's the same $5,000, right that you put into a dependent care account. At the end of the year the employee is going to actually get money back because they're going to be able to get $1,500. In the stipend model they may get a bill for $1,500.
Speaker 1:And so now they're not taking it up If they're not taking it up, if you're aggregating it as an employer, put it all in at the end of the year, right? But if it's on each check, right, and you think of you know, we'll throw some 23 tax brackets, right. Okay, Frontline worker right Under $44,725,. Right, there's a single filer. Right, it's a 12% tax rate.
Speaker 2:The $600 on the $5,000.
Speaker 1:$600. Yeah, the first 11 is 10,. Right, it steps up, you know. And so again, right, it's not nothing but right if it means you got a benefit right. Your net benefit in that case, right is what? $4,400. That's better than zero, because you can't afford to put it on the decap.
Speaker 2:Yeah, I just I worry that maybe some employers don't tell their employees and they get the bill at the end of the year. I know that those that we've worked with we let them know. Yeah.
Speaker 2:At the end of the day, put both solutions together and you have a win-win-win for everybody, and that is what we're going to work on, and I think that's going to probably conclude the episode. So thank you everybody. Unless there was, I cut you off. I cut you off, Did you? Did you get a finish? Did you do something else to say no?
Speaker 1:but listen, no, we can fight, that's fine. Oh you were. I thought you were going to fight.
Speaker 2:No, I was going to try to wrap up. I know that our last couple of episodes were like 50, 60 minutes.
Speaker 2:This one we were shooting for 30, but and we're up just about 40. But it was a cool topic Recap. First of all, the grug fact same cars, indiana people actually got money. There's more tax credits going to more like through states, for employers and for employees. 2024 prediction, caregiving is going to be a financial benefit, it's considered under a financial benefit and then, whichever way you look at it Doug's way, my way, the grug way is both ways.
Speaker 1:Nice, nice.
Speaker 2:That was a good. That was a good outro, so we're going to cue the music and throw your pen. Everybody, have a great weekend, happy new year and we're out.