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Day Care FSA

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How does it work?

There are some rules to consider before enrolling in a Day Care FSA.

  1. Before enrolling in a Day Care FSA, make sure you are eligible to participate.
  2. The day care expense must be allowing you and your spouse to work, actively look for work or be a full-time student.
  3. 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.
  4. The care provider cannot be a dependent on your tax return or your child under the age of 19.
  5. A Day Care FSA works like a bank account. You cannot be reimbursed more than you have contributed to the account year to date.
  6. 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 Day 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.
day care fsa

 

 

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