"Lower Income Federal Employee" Determination
How should agencies determine whether a Federal employee qualifies as a
"lower income Federal employee" for the purposes of this legislation?
Each agency has the discretion to determine who qualifies as a “lower income Federal
employee” in a way that makes sense for its agency. Agencies may choose a particular
definition for one location or mission and a different definition at another location or
mission.
There are several methods for determining eligibility under this law. This guide provides
agencies with a variety of suggested models. Keep in mind that the regulations allow
for maximum flexibility but the intent of the law specifying “lower income” must be
respected. The intention is to allow agencies to determine what works best for them.
All of the suggested models in this document are based on the assumptions that:
1. A Federal employee’s eligibility for this program considers total family income (TFI).
TFI is the combined income of both of the child’s parents/guardians and is listed on their
IRS tax forms as their Adjusted Gross Income; and
2. The amount of subsidy will be reduced by any current State and/or local subsidy the
parents/guardians currently receive; and
3. Employees must have submitted their earnings statements, verification of employment,
and latest IRS 1040 or other relevant IRS tax forms to the administrators of the program
for the purpose of verifying income.
Choosing an eligibility model involves:
1. Deciding whether to set a total family income (TFI) threshold amount, which establishes
the highest amount of total family income that can be earned in a given year in order for
a Federal employee to be eligible for the program. Obviously, setting that amount at a
level that is very high or very low will greatly affect the population of employees who can
benefit from this law. With some models, a threshold amount need not be set since the
formula automatically disqualifies some employees because of the relationship between
their TFI and their actual, expected child care costs.
2. Determining what amount of subsidy the agency will provide to a Federal employee. As
you will see from the different models presented, the approach can vary from prescribing
a set amount of subsidy, using a sliding scale model, to prescribing a sum that is based
on a percentage of TFI or a percentage of child care costs. You should also decide
whether your formula addresses all child care costs for a given family or whether
assistance will be made on a per child basis. One model is based on the cost of care for
each child on an individual basis, while the others are based on the total child care costs
a family pays.
These decisions will have an impact, sometimes dramatic, on the amount of subsidy your
employees will receive.
Not knowing the amount of spousal income a family has can make it difficult initially to
predict how many employees will be eligible and, of those, how many will actually apply
for subsidy. Most agencies have reported, thus far, that they initially overestimated both
the number of eligible employees and the amount of funds the agencies would disburse.