Dependent Care FSA
How does it work?
There are some rules to consider before enrolling in a Dependent Care FSA.
- Before enrolling in a Dependent Care FSA, make sure you are eligible to
participate.
- The dependent care expense must be allowing you and your spouse to work, actively look for
work or be a full-time student.
- Your dependent must live with you and must be 12 years old or younger. A dependent age
13 or older can be eligible if you can provide proof that the dependent cannot physically or
mentally care for himself/herself.
- The dependent care provider cannot be a dependent on your tax return or your child under the age
of 19.
- A Dependent Care FSA works like a bank account. You cannot be reimbursed more than you have
contributed to the account year to date.
- Some types of expenses are not eligible. These include tuition for school at the kindergarten
level or above, overnight camp, nursing home expenses, meals, activity/supply fees and
transportation costs. Montessori tuition is not allowable, however charges from a Montessori school
for preschool and before and after school care are allowable. View more eligible and
ineligible expenses here.
The Dependent Care FSA limit is set by the IRS and is a calendar year limit of $5000 per family. If your
plan year is not on a calendar year, take extra care in calculating your annual election.
To decide on an election amount, estimate your day care expense for the entire plan year and take
into consideration any school holidays, breaks and summer vacation. Your election will be taken out
evenly from each paycheck.
You can make a change to your annual limit if you have a qualifying event. The election
change must be consistent with the qualifying event. In addition to the normal list of qualifying
events, there are some special events exclusive to the Day Care FSA.
- A change in your day care costs, such as a rate decrease or receiving free day care.
- A change in your need for day care (your spouse loses employment or has a change in work schedule).
- Your dependent ceases to satisfy the eligibility requirements.
|