“Childcare benefits for employees” are when an employer covers part or all of an employee’s childcare costs through a benefits program.

But these childcare benefits for employees go by many names. Maybe you’re more familiar with:

• Childcare benefits for employees
• Employee childcare benefits
• Companies with childcare benefits
• Childcare employee benefits
• Employer-sponsored childcare benefits
• Childcare network employment benefits
• Employee childcare benefits
• Childcare network benefits
• Childcare benefits for employers
• HR childcare benefits
• Childcare benefits

No matter which term you prefer, these all refer to the benefits of childcare for employees, by employers.

Why Are Childcare Benefits Necessary?

Companies and organizations that offer comprehensive childcare benefits for employees are able to create a supportive atmosphere for their current (and future!) employees. When working families are excited about working, everything is smooth sailing.

But what, exactly, does employee childcare support help with?

Employer benefits of childcare for employees include:

• Working parents with childcare benefits will show up more consistently
• They’ll produce higher-quality work
• On average, they stay with their employers for a longer period of time
• They are more likely to thrive in their roles
• They are more likely to return to work after the birth of their child
• Offering attractive benefits is a way to recruit and retain top talent

HR and benefits professionals are more likely to offer employer-sponsored childcare benefits for employees in 2022 and 2023 than any other year previously — and it’s a growing trend for a reason. Offering employee childcare benefits simply leads to happier, healthier employees.

What childcare benefits do parents want?

All families have unique needs when it comes to childcare. However, there are many overlapping requests when it comes to employer-sponsored benefits.

What benefits should employers provide to employees?

• Affordability
• 24/7, overnight, and weekend care for families working non-traditional hours
• Urban and rural in-network coverage
• Conveniently located for remote, distributed, and on-site employees
• Access to dedicated care managers to help employees 24/7
• Employee childcare benefits for infants through preschool-age
• Employee childcare benefits for school-aged children, including after school
• Digital parent experience

Offering childcare benefits for employees

Let’s break each highly-desired employee childcare benefit down a bit further.

What types of childcare benefits are employees eligible for?

Affordability for Employees:

Childcare — without the help of an employer benefits program — is extremely expensive. When families have more than one child, those costs tend to skyrocket. Childcare benefits for employees must be affordable so families actually use them.

24/7, overnight, backup, and weekend care for families working non-traditional hours:

Traditional childcare centers — such as on-site daycares — do not offer flexible hours. People often ask, “what childcare works best for overnight employees” (think retail employees, hospitality workers, medical professionals, etc.). Often, smaller in-home daycares offer the most coverage.

Urban and rural in-network coverage:

Childcare coverage in rural areas can be difficult to find, let alone secure. Even in urban areas, overcrowded daycares and long waitlists make it nearly impossible to quickly find care. When offering childcare benefits for employees, it’s important to look for the most flexible options.

Conveniently located for remote, distributed, and on-site employees:

Especially as more workers are shifting to remote or hybrid positions, driving to on-site daycares makes less and less sense. Increasingly, employers are looking to offer childcare options located near their working families’ homes.

Access to dedicated care managers to help employees find childcare 24/7:

Did you know one of the top Googled search terms when it comes to childcare is, “childcare near me?” Parents and guardians want to know where to find help. With a dedicated care manager, this load is removed from their shoulders.

Childcare for infants through preschool-age:

Childcare typically begins when a parent or guardian returns to work when the child is still an infant. These employees look for care (including backup care) beginning around the age of 3-months-old. Not all childcare providers will accept babies, so it’s important that employer-sponsored benefits are flexible enough to meet the needs of each parent.

Childcare for school-aged children, including after-school:

A common misconception is that school-aged children don’t need childcare, but working families are increasingly looking for programs that include after-school hours — usually from 3:00 p.m. until the evening. Again, it’s why employers are always looking for the most flexible employee childcare benefits options.

Digital parent experience:

Working families in 2022 and 2023 are tech-savvy and offering employee childcare benefits that can be managed through an app or easy-to-use website are preferable to systems that require lots of heavy lifting.

What are the best employee childcare benefits programs to offer?

In 2022 and 2023, the top-requested employee childcare benefits offerings include:

• Backup childcare
• Childcare assistance
• Childcare stipends

So let’s dive in.

What is backup childcare?

Backup childcare (sometimes referred to as “backup care” or “emergency care”) is childcare that is needed but was not planned for in advance. Sometimes regular childcare arrangements fall through, emergencies come up, or a grandparent who watches the child falls ill. Because it’s impossible to plan for life, backup care is one of the top-requested offerings in an employee childcare benefits program.

How does backup childcare work?

Backup caregivers come to the employee’s home to provide childcare. Because this is “backup care” (or “emergency care”) this is scheduled last minute.

What is childcare assistance?

Childcare assistance is an employer-sponsored benefits program where a designated manager helps assist working parents in finding quality, affordable, conveniently-located childcare providers.

How does childcare assistance work?

Childcare assistance programs are those that help families pay for the cost of childcare — whether full or partial.

What are childcare stipends?

Childcare stipends (also known as childcare subsidies) are a fixed amount distributed to employees by employers to help cover childcare expenses. Most American families struggle to afford childcare. With the help of their employers, working families who receive childcare stipends are able to stay in the workforce.

How do childcare stipends work?

Employees can use their childcare stipends (also known as childcare subsidies) to pay a full or partial payment to childcare centers, home daycares, nannies, or babysitters.

What types of childcare do parents want?

There are many types of childcare providers, and the more flexible an organization’s benefits offerings, the more likely a family is to find the support they need and deserve. For 2022 and 2023, the top types of childcare parents are requesting are:

• In-home daycares
• Babysitters
• Nannies
• On-site centers
• After-school care
• Tutors
• Daycare center

You may be asking…

What are in-home daycares?

In-home daycares, also referred to as home daycares, are care centers set up in a caregiver’s own home. A caregiver providing childcare services out of their home offers some of the most affordable forms of care (including backup care) available due to the inherent lack of overhead costs. This, coupled with the time flexibility, convenience, and low child-to-teacher ratios make in-home childcare one of the best options for working parents.

What’s the difference between a babysitter and a nanny?

A babysitter is a type of caregiver who meets with a family in-home to care (including backup care) for children. Sometimes groups of neighborhood children meet together in one home — this is referred to as “nanny-sharing.” Babysitters tend to provide more flexible care, including after-hours, holidays, and backup care.

What’s the difference between a nanny and an au pair?

A nanny is a full-time type of childcare provider who meets with the child in a family’s own home, and who often travels with the family, providing flexible hours and low child-to-provider ratio.

What’s an on-site childcare center?

An on-site childcare center is a type of childcare facility typically known as a traditional daycare. These centers typically only accept younger children, including infants, toddlers, and preschoolers.

What’s after-school childcare?

After-school childcare is any type of program that caters to school-age children outside of school hours. These come in many forms, including in-home childcare providers, or local groups such as The Boys & GIrls Clubs of America and the YMCA.

What’s a tutor?

A tutor is a caregiver who is hired — often in a ratio of one-to-one — to help educate a student. Sometimes, babysitters and nannies double as tutors for the school-aged children they look after.

What is a daycare center?

A daycare center is a facility providing supervision and care for children during the daytime. Traditional daycares are independent brick-and-mortar centers.

What happens to organizations that don’t offer employee childcare benefits?

First off, why would a company or organization not offer employer-sponsored childcare benefits? Some employers think that glossing over childcare benefits for employees will save the organization money, time, and energy.

• Is my workforce too small to need childcare benefits?
• Do my remote employees need help with daycares, nannies, or babysitters?
• Do children over a certain age even require childcare?
• How do I offer employee childcare benefits to my rural workforce?
• How much will it cost me to provide childcare benefits?
• Do employers have to cover the cost of care?
• Are childcare benefits for employees only on-site childcare centers?

The truth is not offering employee childcare benefits actually negatively impacts the bottom line.

How does not offering childcare benefits for employees hurt an organization’s bottom line?

Working parents face serious childcare challenges on a daily basis and inadequate childcare results in a negative effect on their overall productivity.

Let’s answer those questions organizations have about offering employee childcare benefits.

1. Is my workforce too small to need childcare benefits?

Any number of employees is the right number of employees to start providing anemployer-sponsored childcare benefits for employees program for your workforce.

1. Do my remote employees need help with daycares, nannies, or babysitters?

Workers who are 100% remote or have hybrid work-from-home flexibility do need help with childcare benefits just like their on-site counterparts.

1. Do children over a certain age even require childcare?

Children of all ages require childcare — from infants through school-aged children.

1. How do I offer employee childcare benefits to my rural workforce?

You’ll want to find an employee childcare benefits program with flexible schedules, multiple caregiver options, and affordable costs. Read up on offering childcare benefits to rural employees on the Upwards blog.

1. How much will it cost me to provide employee childcare benefits?

Starting out as low as $0.73 per employee per month, some organizations can begin offering employer-sponsored childcare benefits to their workforce.

1. Do employers have to cover the cost of care?

Employers who help cover the cost of childcare (whether full or partial) see reduced absenteeism, lower turnover, increased productivity, and more competitive recruitment when they support their working families with employee childcare benefits.

1. Are employee childcare benefits for employees only onsite childcare centers?

No, onsite childcare centers are only one form of childcare, and often they can also be too expensive, inflexible, or full/waitlisted. Increasingly, organizations are looking to implement solutions such as in-home daycares, nannies, and babysitters.

Terms around productivity get thrown around a lot. You may find yourself wondering:

• What is employee absenteeism?
  • It’s a pattern of unplanned absences at work — which negatively impacts a business’s bottom line.
• What is employee presenteeism?
  • It’s when employees show up for work despite childcare emergencies, which leads to reduced productivity and a higher possibility of mistakes on the job.
• What is employee retention?
  • It’s the ability of an organization to retain its current employees — which is impossible when employees start looking for jobs offering better benefits.

Employees need these childcare benefits for employees to be maximally productive. Without comprehensive, flexible, and affordable employer-sponsored childcare benefits, employers pay a substantial cost to replace any workers who are forced to leave the organization.

What are 6 ways companies are benefiting by providing childcare benefits?

As many employers now know, providing employee childcare benefits not only helps their working families but organizations as well.

What are the top six ways companies benefit by providing employer-sponsored childcare benefits?

1. Happier employees
2. Healthier employees
3. Lower turnover rates
4. Increased productivity
5. An improved work culture
6. Competitive hiring

Employee Childcare Benefits FAQ

1. Is paid maternity leave or paid adoption leave an employee childcare benefit?

At this time, most employee childcare benefits programs do not include paid parental leave or paid adoption leave.

1. Will an employer pay for a family member to care for my children?

In many cases, yes! Just so long as the caregiver is a licensed daycare provider — such as an in-home care provider — or a registered nanny or babysitter through a third-party site. Often, this is a great solution for backup care!

1. Do employee childcare benefits include school tuition?

Private school tuition is rarely covered through employee childcare benefits. However, many preschools or in-home daycare providers offering curriculum-based childcare accept employer-sponsored childcare benefits.

1. Is dependent care assistance taxable?

Current IRS limitations on tax-free dependent care assistance plans are $5,000 annually, or $2,500 per parent if married and filing separately. Assistance over $5,000 is considered taxable income.

1. How do I report dependent care assistance on a W-2?

Dependent care assistance are recorded in box 10 on an employee’s W-2 form and are treated as an exemption credit with the IRS. This is the same for all forms of care, including backup care.

1. How does backup care address pandemic safety?

Many in-home daycares, nannies, and babysitters are not accepting enrollments and or returning children who do not adhere to the CDC’s Operational Guidance for K-12 Schools and Early Care and Education Programs to Support Safe In-Person Learning addressing COVID concerns. Updated information can be found at www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/k-12-childcare-guidance.html.

How much does my company pay for lack of childcare?

Let’s get down to brass tacks. You may be thinking, “What is my organization’s childcare benefits ROI?”

What’s the value of employee childcare benefits?

To find the return on investment that employers see on their balance sheet when providing childcare benefits for employees, use Upwards’ free ROI calculator!