The dependent care benefit option is comparable to the medical benefit option discussed previously. The estimate must be done by the employee prior to the plan year. The estimated dependent care expenses are redirected. They are moved from the employee's salary to the individual's Cafeteria Plan account. Reimbursements are made from this account to the extent of the account balance.
Individual accounts require employer administration.
Income and Social Security taxes are reduced. They are not paid on the amount of salary redirected. Administrative Costs Administrative costs will vary significantly between plans. As discussed previously, a plan which offers insurance only would require virtually no administrative costs.