Appendix B - Daycare Allowance – Pro-Rating Monthly Deductibles and Ceilings – A Step by Step Guide

Where employees use less than the total number of half-day periods within the given month, both the deductible and post ceiling will be prorated based on the number of periods the child attends, in a given month.

Formula for Calculating Allowances

1. Determine total number of periods in the given month.

2. Determine the number of periods used in the month.

3. Divide the number of periods in a given month by the number of periods used.

4. Take the result (percentage) and apply it to the post ceiling.

5. Apply the same percentage to the deductible.

6. The daycare allowance corresponds to the difference between the prorated deductible and the amount paid by the employee or the prorated monthly ceiling, whichever is the lessor.

Example - Daycare Allowance - Pro-Rating Reference

Example 1 - Where the amount claimed does not exceed the prorated post ceiling.

In the month of June 2009, an employee sends their toddler to daycare Monday mornings, all-day on Tuesdays, and for the afternoon on Wednesdays.

Data

• Total number of periods in June 2009, at post, is 44
• Number of periods used is 19
• Actual cost of daycare paid by employee for June (hypothetical): $750
• Deductible is $1,241 per month for toddlers
• Post ceiling is $2000

Example 2 - Where the amount claimed exceeds the prorated post ceiling.

In the month of June 2009, an employee sends their toddler to daycare Monday mornings, all-day on Tuesdays, and for the afternoon on Wednesdays.

Data

• Total number of periods in June 2009, at post, is 44
• Number of periods used is 19
• Actual cost of daycare paid by employee for June (hypothetical): $900
• Deductible is $1,241 per month for toddlers
• Post ceiling is $2000