AUTHORITY: Implementing Sections 125 and 129(d) of the Internal Revenue Code (26 USC 125 and 129(d)), Section 405-110 of the Civil Administrative Code of Illinois [20 ILCS 405/405-110], Section 30c of the State Finance Act [30 ILCS 105/30c], and Sections 3 and 9 of the State Employees Group Insurance Act of 1971 [5 ILCS 375/3 and 9] and authorized by Section 5-625 of the Civil Administrative Code of Illinois [20 ILCS 5/5-625].

SOURCE: Emergency rules adopted at 10 Ill. Reg. 20248, effective December 1, 1986, for a maximum of 150 days; adopted at 11 Ill. Reg. 9477, effective April 30, 1987; emergency amendments at 12 Ill. Reg. 11795, effective July 1, 1988, for a maximum of 150 days; amended at 12 Ill. Reg. 17283, effective October 14, 1988; emergency amendments at 13 Ill. Reg. 214, effective January 1, 1989, for a maximum of 150 days; amended at 13 Ill. Reg. 9259, effective May 31, 1989; amended at 16 Ill. Reg. 13801, effective August 28, 1992; amended at 19 Ill. Reg. 8590, effective June 14, 1995; amended at 21 Ill. Reg. 2950, effective February 21, 1997; amended at 31 Ill. Reg. 352, effective December 28, 2006; amended at 37 Ill. Reg. 4235, effective March 22, 2013.

SUBPART A: INTRODUCTION AND DEFINITIONS

 

Section 2110.10  Summary and Purpose of Plan

 

This Plan is intended to qualify as a dependent care assistance program under Section 129(d) of the Internal Revenue Code (26 USC 129[d]) (Code) and is to be interpreted in a manner consistent with the requirements of Section 129(d). The purpose of the Plan is to enable Participants to elect to receive Reimbursements of their Dependent Care Expenses that are excludable from the Participants' taxable Compensation under Sections 125 and 129(d) of the Code.

 

Section 2110.20  Plan Number

 

The number of this Plan for purposes of reporting statistical information to the Internal Revenue Service is 501.

 

Section 2110.30  Definitions

 

a)         Wherever used in the Plan, the following terms have the following meanings and when the defined meaning is intended, the term is capitalized:

 

"Anticipated Payroll" means those payrolls in which the Participant is issued a paycheck during the Pay Period that the deduction is taken.

 

            "Change in Family Status" means marriage, divorce, death of Spouse or child, adoption of child, return to work after birth of a child, termination of employment of Spouse, or any other events the Department determines constitute a Change in Family Status.

 

            "Code" means the Internal Revenue Code of 1954 (26 USC 1 et seq.) and applicable regulations, or any successor statute.

 

            "Compensation" means wages, salaries and other employee Compensation received by a Participant or Spouse, including the net earnings from self-employment within the meaning of section 1402(a) of the Code.

 

"Delayed Payroll" means those payrolls in which the Participant is issued a paycheck following the Pay Period that the deduction is taken.

 

            "Department" means the Illinois Department of Central Management Services.

 

"Dependent" means a Participant's Qualifying Child, Spouse or Qualifying Relative.

 

"Dependent Care Expenses" mean expenses incurred by a Participant that:

 

are incurred for the well-being and protection of a Dependent of the Participant,

 

are paid to a Dependent Care Service Provider, and

 

are incurred to enable the Participant and his or her Spouse to be gainfully employed.

 

Dependent Care Expenses may be for household services if part of the services are for the care of the Dependent.

 

Dependent Care Expenses do not include expenses paid or incurred for services provided by:

 

a child of the Participant who is under the age of 19 at the close of the Plan Year; or

 

an individual who the Participant or Spouse can claim as an exemption on his or her income tax form.

 

Examples of eligible expenses are:

 

Day care centers.  The centers must comply with all applicable laws and regulations of a State or unit of local government.

 

Nursery schools and pre-schools (private or public).

 

Before and after-school care.

 

Babysitters or nurses or grandparents or any other Dependent Care Service Providers inside or outside the Participant's home.

 

Household services. The services of a housekeeper, maid, or cook are eligible expenses if performed partly for the benefit of the Dependent.

 

Work-related expenses. Any work-related expenses that allow the Participant (and Spouse, if married) to work. Examples are meals and lodging for a housekeeper and Social Security and Federal unemployment taxes paid on wages.

 

Summer day camps (full day camps used as day care) and special instruction camps (i.e., dance, music, sports).

 

Examples of expenses that are not eligible are:

 

The cost of schooling for children in kindergarten or higher.

 

Chauffeur or gardener services.

 

Expenses claimed on the Participant's income tax return or by another taxpayer.

 

Transportation related to dependent care services.

 

Summer camp (not day care and usually includes an overnight stay).

 

Expenses not allowed by the Internal Revenue Service for the child and dependent care credit on an income tax return.

 

"Dependent Care Service Provider" means a person or institution that provides care or other services described in the definition of Dependent Care Expenses.

                                                                       

"Eligible Employee" means any employee working fulltime or not less than half time who is eligible to participate in the Health Plan authorized by the State Employees Group Insurance Act of 1971 [5 ILCS 375].  It includes those employees who have lost eligibility to participate in the Health Plan because of a reduction in hours worked but have chosen continuation coverage through payroll deduction as authorized by the Consolidated Omnibus Budget Reconciliation Act (COBRA) (P.L. 99-272) as long as there is no break in coverage or payroll deductions.  An Eligible Employee of the Employer excludes independent contractors, temporary employees and retirees who return to work for not longer than 75 days per year after they retire. 

 

            "Employer" means the State of Illinois, which includes all officers, boards, commissions, and agencies created by the Illinois Constitution, whether in the executive, legislative or judicial branch; all officers, departments, boards, commissions, agencies, institutions, authorities, universities, bodies politic and corporate of the State; administrative units or corporate outgrowths of the State government that are created by or pursuant to statute, other than units of local government and their officers, school districts and boards of election commissioners; and all administrative units and corporate outgrowths of the above as may be created by executive order of the Governor.

 

            "Enrollment Form" means the form provided by the Department for the purpose of filing an election and Compensation reduction agreement and for making changes authorized by the Plan.

 

"Health Plan" means health, dental and vision coverage offered by the Department to eligible persons.

 

            "Highly Compensated Participant" means any Participant who was in either of the following categories at any time during the current year:

 

            an officer of the State or its administrative units or corporate outgrowths who has annual total Compensation greater than $75,000, or

 

            a Participant who receives Compensation in excess of $50,000 and is in the top 20% of all State employee salaries.

 

            "Participant" means each Eligible Employee who participates in the Plan in accordance with Section 2110.210 of this Part.

 

            "Pay Period" means a regular accounting period established by the State of Illinois for measuring and paying Compensation earned by employees.  A Pay Period may be monthly, semi-monthly or biweekly.

 

            "Plan" means the State of Illinois Dependent Care Assistance Plan as set forth in this Part, and as may be amended from time to time in compliance with the Illinois Administrative Procedure Act [5 ILCS 100].

 

"Plan Administrator" means an organization, company or other entity designated by the Director to perform certain duties related to the administration of a specific plan in accordance with the terms of the contract between the organization and the Department.

 

            "Plan Year" means the 12-consecutive-month period comprising the State fiscal year beginning July 1.

 

"Qualifying Child" means an individual who has a specified family-type relationship to the Participant, lives in the Participant's household for more than half of the taxable year, is 12 years old or younger and has not provided more than one-half of his or her own support for the taxable year.

 

"Qualifying Relative" means an individual who is physically and/or mentally incapable of self care, is not someone else's Qualifying Child, lives in the Participant's household for more than half of the taxable year, spends at least eight hours per day in the Participant's home, has a gross income less than the exemption allowed under section 151(d) of the Internal Revenue Code, and receives more than one-half of his or her support from the Participant during the tax year. 

 

            "Reimbursement" means to pay a Participant in this Plan for Dependent Care Expenses from his or her dependent care assistance account.

 

            "Spouse" means the person to whom the Participant is married. Spouse does not include a person separated from the Participant under a decree of divorce.  A Participant is entitled to receive Reimbursement for Dependent Care Expenses for the Spouse if the Spouse is physically or mentally incapable of self care, lives in the Participant's household for more than half of the taxable year and spends at least 8 hours per day in the Participant's home.

 

            "Termination" means the permanent severance of the Participant's employment relationship with the Employer as provided by the appropriate rules of the Employer.

 

b)         A pronoun or adjective in the masculine gender includes the feminine gender and the singular includes the plural, unless the context clearly indicates otherwise.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

SUBPART B: ADMINISTRATION

 

Section 2110.110  Role of the Department/Plan Administrator

 

a)         The Plan shall be administered by the Plan Administrator.

 

b)         The Department reserves the right to enter into agreements with other agencies to delegate various record keeping and other administrative functions to the employing agencies of Participants.

 

c)         It shall be a principal duty of the Department to see that the Plan is carried out for the exclusive benefit of persons entitled to participate in the Plan without discrimination among them.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.120  Expenses of Administration

 

Any expenses incurred relative to the administration of the Plan shall be paid by the Department.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

SUBPART C: PARTICIPATION

 

Section 2110.210  Date of Participation

 

a)         An Eligible Employee will become a Participant upon an election under this Plan to receive dependent care assistance.

 

b)         New Eligible Employees may become Participants upon an election to receive dependent care assistance that is made within 60 days after becoming an employee.

 

c)         Eligible Employees who experience a Change in Family Status may elect to participate at any time during the Plan Year.  The election must be made within 60 days after the Change in Family Status.

 

d)         Elections from new Eligible Employees or those who have had a Change in Family Status will be effective the first Pay Period after the signature date of the Participant on the Enrollment Form or the date of the Change in Family Status, whichever is later.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.220  Insufficient Salary

 

a)         Participation can only be through payroll deduction.

 

b)         In the event the Participant has no salary or insufficient salary in a particular Pay Period because of a temporary change in job status, including, but not limited to, reductions in work hours and leaves of absence, no deduction will be taken and the Participant's participation in the Plan will be revoked.

 

c)         The revoked Participant described in this Section can request Reimbursement of Dependent Care Expenses in accordance with Subpart F of this Part.

 

d)         The revoked Participant described in this Section can re-enroll the next election period or upon experiencing a Change in Family Status.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.230  Errors

 

a)         Participants are responsible for monitoring their accounts and notifying the Employer of any payroll or other errors.

 

b)         In the event a deduction is missed or an incorrect amount is deducted because of payroll or other processing errors, the error must be corrected on a later payroll, or direct billed to the Participant if he or she is off payroll.

 

c)         If the correction of the error causes an economic hardship for the Participant, the funds sufficient to correct the error will be deducted from the Participant's paycheck over the two months immediately following the discovery of the error.

 

d)         In the event of overpayment because of error, the Participant will be asked to refund to the Department the excess Reimbursement.

 

e)         If the Participant refuses, the Department will request the Comptroller to withhold the required amount from the Participant's next available paycheck pursuant to 74 Ill. Adm. Code 285.  If the Participant is off payroll, the overpayment will be added as income to the Participant's W-2.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.240  Reinstatement of Former Participant (Repealed)

 

(Source:  Repealed at 12 Ill. Reg. 17283, effective October 14,1988)

SUBPART D: ELECTION TO RECEIVE DEPENDENT CARE ASSISTANCE

 

Section 2110.310  Election Procedure

 

a)         An Eligible Employee may elect to receive dependent care assistance under this Plan by making an election and Compensation reduction agreement on an Enrollment Form provided by the Department.

 

b)         The enrollment period will be at a time to be determined by the Department prior to the beginning of the Plan Year. The enrollment period shall be sufficient to allow Eligible Employees to enroll in the Plan and shall in no case be less than 30 days prior to the beginning of the Plan Year.

 

c)         The election must be for a specified annual dollar amount evenly divisible by the number of Pay Periods remaining in the Plan Year.

 

d)                  The Participant must re-enroll each year to continue participation.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.320  Irrevocability of Election

 

a)         An election to participate shall be irrevocable during the Plan Year unless a Change in Family Status has occurred.

 

b)         A Change in Family Status, including marriage, divorce, death of a Spouse or child, adoption of a child, return to work following the birth of a child, termination of employment of a Spouse, and any other events that the Department determines constitute a Change in Family Status, will permit a change or revocation of an election during a Plan Year under the Code.

 

c)         Any new election under this Section shall be effective the first Pay Period after the signature date of the Participant on the Enrollment Form or the date of the Change in Family Status, whichever is later.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.330  Maximum Dependent Care Assistance

 

a)         The maximum amount for which the Participant may be reimbursed under this Plan during the Plan Year shall be the least of:

 

1)         the Participant's taxable Compensation for the Plan Year,

 

2)         the actual taxable or deemed Compensation of the Participant's Spouse for the Plan Year, or

 

3)         $5,000.

 

b)         The combined maximum for a Participant and Spouse who are both participating in plans of this type is $5,000.

 

c)         The maximum for a married Participant filing a separate return is $2,500.

 

d)         The Pay Period maximum is the annual maximum divided by the number of Pay Periods in the Plan Year. This Pay Period maximum cannot be exceeded even if there is a Change in Family Status.

 

e)         Any amount reimbursed under this Plan during the tax year reduces, dollar for dollar, the amount of expenses eligible for the dependent care credit on the Participant's federal income tax form.

 

f)         A Spouse shall be deemed to have Compensation of $250 per month if the Participant has one Dependent and $416.66 per month if the Participant has two or more Dependents if the Spouse is:

 

1)         a student at an educational institution, or

 

2)         is physically or mentally incapable or caring for himself or herself.

 

g)         A Participant shall be considered married for the whole Plan Year if the Participant is married during the Plan Year.

 

h)         A Participant shall be considered single if he or she is divorced from the Spouse at the close of the Plan Year.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.340  Minimum Dependent Care Assistance

 

The minimum level of participation in this Plan is $20 per month.

SUBPART E: DEPENDENT CARE ASSISTANCE ACCOUNTS

 

Section 2110.410  Establishment of Accounts

 

The Plan Administrator will establish and maintain a dependent care assistance account for each Plan Year for each Participant who has enrolled for the Plan Year.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.420  Crediting of Accounts

 

a)         There shall be credited to a Participant's dependent care assistance account for each Plan Year, as of each Pay Period, an amount equal to the reduction made in the Participant's Compensation in accordance with the Participant's election.

 

b)         All amounts credited to each dependent care assistance account shall be the property of the State until paid out pursuant to Subpart F of this Part.

 

c)         No interest will be paid on balances in the dependent care assistance accounts.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.430  Debiting of Accounts

 

A Participant's dependent care assistance account for each Plan Year shall be debited as of the date the Reimbursement is processed by the Plan Administrator under Section 2110.520 of this Part.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.440  Forfeiture of Accounts

 

a)         The amount credited to a Participant's dependent care assistance account for any Plan Year shall be used:  

 

1)         only to reimburse the Participant for Dependent Care Expenses incurred during the applicable Plan Year, and

 

2)         only if the Participant applies for Reimbursement on or before September 30 of the next Plan Year.

 

b)         If any balance remains in the Participant's dependent care assistance account for any Plan Year after all Reimbursements have been made, the balance shall not be carried over to reimburse the Participant for Dependent Care Expenses incurred during a subsequent Plan Year, and shall not be available to the Participant in any other form or manner.

 

c)         Any remaining balance in the fund shall be distributed to the 202 Fund.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

SUBPART F: PAYMENT OF DEPENDENT CARE ASSISTANCE ACCOUNTS

 

Section 2110.510  Claims for Reimbursement

 

a)         A Participant who has enrolled for a Plan Year may apply to the Plan Administrator for Reimbursement of Dependent Care Expenses incurred by the Participant between July 1 and June 30. Dependent Care Expenses are treated as incurred when the dependent care is provided and not when the Participant is billed or charged, or pays for the dependent care.

 

b)         New Participants who enroll during the open enrollment period  may apply for Reimbursement of Dependent Care Expenses incurred between the first day of the Plan Year and June 30. New Participants who enroll through a mid-year enrollment due to a Change in Family Status may apply for Reimbursement of Dependent Care Expenses incurred between the first day of the Pay Period following the signature date on the Enrollment Form, or the date of the Change in Family Status, whichever is later, and June 30.

 

c)         Participants who revoke participation in accordance with Sections 2110.220 and 2110.320 before the end of the Plan Year may apply for Reimbursement of Dependent Care Expenses incurred between July 1 and, if on an Anticipated Payroll, the last day of the Pay Period that a deduction was taken or, if on a Delayed Payroll, the last day of the Pay Period following the Pay Period that the last deduction was taken.

 

d)         The Participant may apply by submitting an application in writing to the Plan Administrator on a claim form provided by the Plan Administrator setting forth:  

 

1)         the amount, beginning and ending service date, and type of expense for which Reimbursement is requested;

 

2)         the name and address of the Dependent Care Service Provider; and

 

3)         bills, invoices, receipts or other statements showing the amounts of the expenses.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.520  Reimbursement of Participant

 

a)         The Plan Administrator shall reimburse the Participant from the Participant's dependent care assistance account for Dependent Care Expenses incurred during the Plan Year for which the Participant submits documentation in accordance with Section 2110.510.

 

b)         The Reimbursement schedule will be established by the Plan Administrator in a manner that allows the Participant to receive Reimbursement no less than once a month.

 

c)         No Reimbursement under this Section shall at any time exceed the balance of the Participant's dependent care assistance account for the Plan Year at the time of the Reimbursement.

                       

d)         The Plan Administrator will reimburse Participants who have filed claims in the prescribed manner:  

 

1)         at least once a month if the claim equals or exceeds $5.00, and if there is enough money in the account,

 

2)         at least once the twelfth month (or the final month of participation) regardless of the amount.

 

(Source:  Amended at 37 Ill. Reg. 4235, effective March 22, 2013)

 

Section 2110.530  Exclusions

 

A Participant shall not be reimbursed for any expense that would otherwise be a Dependent Care Expense if:  

 

a)         the expense was incurred at a time when the Participant was not a Participant in the Plan; or

 

b)         a claim for Reimbursement of the expense has not been filed in accordance with the provisions of Section 2110.510; or

 

c)         the expense was claimed as a credit or deduction on the Participant's federal or State income tax forms; or

 

d)         the Participant does not report the Dependent Care Service Provider's name and address to the IRS or to the Plan Administrator as provided by applicable Code requirements.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.540  Statements

 

a)         On or before January 31 of each year, the Department shall furnish to each Participant who was enrolled in the Plan during the prior calendar year a written statement showing the amount of contributions made by the Participant into his or her account.

 

b)         The Plan Administrator shall also notify each Participant in writing, or electronically if the Participant has opted for communication, via a quarterly statement of the unused balance in his or her account.

 

(Source:  Amended at 37 Ill. Reg. 4235, effective March 22, 2013)

SUBPART G: TERMINATION OF PARTICIPATION

 

Section 2110.610  Termination or Death of Participant

 

a)         In the event that a Participant terminates State service or dies, the Participant's participation shall terminate. Eligible expenses will include only those expenses incurred through the last day of the Pay Period that the last deduction was taken, if on an Anticipated Payroll, or, if on a Delayed Payroll, the last day of the Pay Period following the Pay Period that the last deduction was taken.

 

b)         If the Participant returns to State service the same Plan Year, the Participant can re-enroll in accordance with the provisions of Section 2110.210.  If reenrollment occurs within 30 days after the Termination or other separation from State service, the contribution amount per Pay Period must be the same as the amount contributed prior to the Termination.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.620  Fraud

 

In the event a Participant knowingly supplies the Department or Plan Administrator with false information or knowingly files a claim that is not qualified for Reimbursement, the Department or Plan Administrator shall exclude the Participant from further participation in the Plan for all subsequent Plan Years.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

SUBPART H: MISCELLANEOUS

 

Section 2110.710  Non-discrimination

 

a)         This Plan shall meet the requirements of Code sections 129 and 125 that require that all benefits provided for Participants who are highly compensated are provided for all other Participants and that establish benefits tests.

 

b)         Unless otherwise determined by the Department, the special dependent care assistance test will be used for this Part.  It:

 

1)         requires that the average benefit of Participants must be at least 55 percent of the average benefit of Highly Compensated Participants, and

 

2)         allows Participants with Compensation below $25,000 to be disregarded for purpose of this test.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.720  Illegality of a Particular Provision

 

The illegality of any provision of this Plan shall not affect the other provisions of the Plan and the Plan shall be construed in all respects as if the invalid provision were omitted.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.730  Applicable Law

 

To the extent not preempted by federal law, the Plan shall be governed by and construed according to the laws of the State of Illinois.

 

Section 2110.740  Rights Against the Employer

 

Neither the establishment nor any modification of the Plan nor any distributions made under the Plan shall be construed as giving to any Participant any legal or equitable rights against the Employer, the Department, State officers or administrators, or as giving any person the right to be retained in the employ of the Employer.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)

 

Section 2110.750  Effect on Pension

 

Participation in this Plan will not affect the amount paid into a Participant's pension nor reduce benefits received.

 

Section 2110.760  Effect on Social Security

 

Participation in this Plan reduces a Participant's Social Security wages by the amount contributed and may therefore reduce the benefits received.

 

Section 2110.770  Benefits Solely From General Assets

 

The benefits provided by this Plan will be paid solely from the general assets of the State.  The State will not be required to maintain any fund or segregate any amount for the benefit of any Participant, and no Participant or other person shall have any claim against, right to, or security or interest in, any asset of the State from which any payment under the Plan may be made.

 

Section 2110.780  Nonassignability of Rights

 

The right of any Participant to receive Reimbursement under the Plan shall not be alienable by the Participant by assignment or any other method.  Any attempt to alienate a Participant's interest will not be recognized.

 

Section 2110.790  Tax Consequences

 

Once enrolled it shall be the obligation of each Participant to determine whether each payment under Section 2110.420 of this Part is excludable from the Participant's Compensation for federal and state income tax purposes.  Participants should notify the Department if there is reason to believe that any payment is not excludable.

 

Section 2110.800  Indemnification of State by Participants

 

If any Participant receives Reimbursements under Section 2110.520 of this Part that are not for Dependent Care Expenses, such Participant shall indemnify and reimburse the State for any liability the State may incur for failure to withhold federal or state income tax.

 

Section 2110.810  Right to Amend and Terminate Reserved

 

a)         The Department has established the Plan with the bona fide intention and expectation that it will be continued indefinitely, but the Department will have no obligation to maintain the Plan for any given length of time and may discontinue or terminate the Plan at any time without liability.

 

b)         Upon termination or discontinuance of the Plan, all elections and reductions in Compensation relating to the Plan shall terminate, and the Department will pay any remaining balances to the Participants as additional taxable Compensation.

 

(Source:  Amended at 31 Ill. Reg. 352, effective December 28, 2006)