A recent report, Parents Under Pressure: The U.S. Surgeon General’s Advisory on the Mental Health & Well-Being of Parents, recommended ways for employers to expand policies and programs that support the well-being of parents and caregivers in the workplace. This can include offering access to child care in the community or on site (read about the pros and cons of on-site child care). Parents have a variety of child-care needs that could make on-site care impractical or undesirable.

The International Foundation of Employee Benefit Plans’ Employee Benefits Survey: 2024 Survey Report found that 8% of U.S. organizations currently offer child-care subsidies.

Since every family has unique child-care needs, employers might be hesitant to get involved. However, child-care benefits can boost employee morale and loyalty. The main ways employers could consider supporting child care are with access assistance, financial assistance or a combination of the two.

Child-Care Provider Network Access

Finding convenient, affordable and quality child care with available openings on the days and times needed can be challenging. Employers can work with third-party vendors that provide a platform for locating licensed child-care providers (including in-home providers) with real-time availability. Employees can identify child-care providers that meet their unique needs.

For example, SMART launched child-care benefits in 2025, including programs where members of participating local unions can find child-care providers that offer nontraditional hours, drop-in care and 24/7 availability.

Financial Assistance

Geared toward lower income workers, stipends or reimbursements can be paid from the employer to the child-care provider or the employee. Another option is employer contributions to employees’ dependent care flexible spending accounts or dependent care assistance program (DCAP).  

Examples of financial assistance policy designs

• DCAP employer contribution: The Dow Chemical Childcare Assistance Program provides a $1,500 contribution to U.S. employees who qualify, determined by their annual base pay and/or job grade for use toward qualifying child-care expenses.

• Reimbursement program: In addition to a child-care benefit for young children, USAA offers a reimbursement program for dependent children of any age with disabilities, including adults. The benefit reimburses 50% of qualifying child-care expenses up to the maximum annual reimbursement amount, which varies by base salary. For example, a base salary under $60,000 provides an annual maximum reimbursement of $3,000. The reimbursement decreases gradually until it phases out at $100,000 base salary.
  
• Paying child-care providers directly: Dick’s Drive-In offers an early childhood education scholarship program that generally provides $5,000 a year (can be allocated monthly) up to a lifetime benefit of $50,000 per employee. The program allows employees to choose their child-care provider, including family, friends or neighbors.

Combination Examples

• Monthly flat rate stipend: Dollywood Company provides a monthly stipend toward the cost of care at a flat rate of $100 for each employee’s first child and $50 for every additional child. The 19^th reports that this monthly stipend is available to those employees whose children are cared for by a provider via a child-care marketplace vendor, Upwards. The vendor partnership supports Dollywood staff whose schedules vary and include shifts on the weekends, in the evenings and over holidays.
  
• Monthly percentage stipend: Mazda Toyota Manufacturing in Alabama pays 30% of an employee’s child-care costs up to $250 a month in combination with access to a child-care-on-demand vendor TOOTRiS. For example, when a worker moved to rotating shifts with overnights, she was able to locate a provider who cares for children 24 hours a day, via the vendor directory. The benefit appears to have a positive effect of slowing turnover, especially among women.
  
• Amount based on need: The City of San Diego Municipal Child Care Benefit Pilot Program helps cover the cost of child care, made possible through a $2 million federal grant. Using the vendor TOOTRiS, the benefit is paid directly to providers and can include “family, friend and neighbor” child care. Eligible employees can be full- or part-time status and must have an annual household gross income less than 200% of the state median income based on family size. Benefit payments may range between $200 and $1,200 per dependent, based on family need ranked by household income. During the first year of the program, 230 city employees applied for assistance, and 173 employees were initially selected to participate based on their eligibility.

Employer Considerations

On the plus side for employers, child-care financial assistance is a defined contribution design, which can keep costs down. However, if the employer contribution doesn’t rise with child-care cost increases, the value of the benefit diminishes over time. Drawbacks include the administrative burden and added costs of financial assistance. While vendors can streamline enrollment, payments and possible tax reporting, some employers might not want to add another point solution.

Employer-provided child-care subsidies aren’t common but have potential for growth as employers continue to look for ways to boost recruitment, retention and productivity.

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.