The second most common benefit: backup care

I recently wrote about dependent care FSAs, the thing an employer most commonly means when they mention "child care benefits." Now, let's discuss the second most commonly offered thing: backup care benefits.

Typically, this means a program to provide or reimburse last-minute child care services, for when your daycare isn't open or your nanny can't come in. 10-25 sessions a year is a common ballpark.

The DCFSA has historically been the most straightforward tax-supported option, so its predominance is straightforward. Backup care (BUC) is a bit different. One "secret" of BUC is that it's exceptionally high margin for the big care providers that offer it. Employers typically pay a per-employee fee even when the vast majority of sessions go unused. And sessions that are used incur a cost to the employer well above the actual cost of care. Yet the actual results can be uneven. While I don't want to impugn the entire industry, the common employee perception is that you need to request care well in advance to have a good chance of getting any - impossible for true emergencies. You can consistently get reimbursed for substitute care you arrange, but in that case the logistics burden falls on you; families with reliable access to babysitters or extended family have less of a need for BUC in the first place.

I don't want to seem too cynical. The marginal cost to a company of a sudden absence from a mid-senior employee is usually quite high, much higher than the cost of BUC even with fees, so the ROI math generally works out. It's not a "scam." But it definitely isn't enough. And BUC does nothing to address the cost of regular care, which routinely runs into the mid-five figures.

What's needed is an economically viable way for employers to help out with primary child care. That's what my firm does.