Guide to Offering Daycare and Daycare Subsidies

Figure out how deep you want to go

There are three common flavors to this benefit: Either your company opens a daycare on-site, opens or manages one off-site, or it simply helps employees with the cost.

I recommend: What you do has a lot to do with the size of your company and its willingess to commit. Forbes magazine has a good list comparing what big-name employers charge for on-site care (in general, it's half the going rate for private care elsewhere). The Work & Family Connection has a simple, frank frequently-asked questions page for employers considering opening a daycare.

Contract out management to a private label daycare

A number of comanies have moved into the business of setting up, staffing and managing company daycare programs.

I recommend: Among them are Knowledge Learning Corp., Children's Choice, La Petite Academy, and Bright Horizons.

Too small? Consider drop-in care

A growing trend among even larger employers is to provide short-term back-up care for when circumstances (like overtime or a sick nanny) demand an employee choose between work and family.

I recommend: Caregivers On Call, WorkOptions and LifeCare provide emergency referrals for when normal resources fail.

Consider setting up flexible-spending accounts

You need not get into the actual childcare business or even pay to subsidize it. Allowing employees to sock away pre-tax dollars in an FSA can save them thousands in taxes.

I recommend: The U.S. government allows employers to offer flexible-spending acounts with some restrictions, explained in IRS Pub. 969 and at the U.S. government's National Childcare Information Center. In general, you have to be already offering a cafeteria-style benefit plan. Aetna, the insurance company, offers this quickie calculator for figuring if your firm is big enough to play here.

Talk to your tax advisor about breaks

Offering or subsidizing care can mean some immediate tax relief. Not enough to pay for it all, but productivity, retention and a tax break add up to a serious incentive.

I recommend: Take a look at these two quick breakdowns on the tax issues, from the National Childcare Information Center  and from consultancy KidCentric.