This guide will provide a comprehensive overview of a Dependent Care Flexible Spending Account (DCFSA), detailing its functionality.
What is a Dependent Care FSA?
A Dependent Care FSA is a tax-advantaged account that allows you to save pre-tax dollars specifically for dependent care expenses. These funds can generally be used to care for qualifying children under the age of 13, as well as your spouse or relatives who live with you and are physically or mentally incapable of self-care. For a comprehensive list of qualifying persons, please visit the IRS website.
Contribution Limits
For the 2025 tax year, you can contribute up to $5,000 per household ($2,500 if married and filing separately). In 2026, the limit will increase to $7,500 per household ($3,750 if married and filing separately).
Eligible Expenses
You can use Dependent Care FSA funds for:
- Daycare and preschool fees
- Before and after-school programs
- Summer day camps
- Adult daycare services
How to Enroll
You can enroll in a Dependent Care FSA during your employer’s open enrollment period, or if your employer allows, due to a Qualifying Life Event (QLE). Decide how much to contribute for the year and fill out the necessary forms.
Accessing Your Dependent Care FSA Funds
- First, you pay for the dependent care services out of your own pocket. This could be for daycare, preschool, summer camps, or adult daycare services.
- After you’ve paid for the services, you submit a claim to your FSA administrator. This usually involves filling out a claim form and providing proof of the expense, such as receipts or invoices.
- Once your claim is approved, you will be reimbursed from your Dependent Care FSA. The reimbursement can be deposited directly into your bank account or sent to you as a check, depending on your plan’s options.
Tips for Reimbursement
- Always keep copies of your receipts and claim forms for your records.
- Submit your claims as soon as possible after incurring the expense to ensure timely reimbursement.
- Be aware of any deadlines or specific requirements your plan may have for submitting claims.
A Dependent Care FSA can help you manage the costs of dependent care. By understanding how it works and planning your contributions, you can make the most of this benefit.
Partnering with Pierce Group Benefits
This benefit not only helps reduce the financial burden of dependent care but also supports employees in balancing their work and family responsibilities. For more information on Dependent Care FSAs, speak with your PGB Account Executive or get in touch with a PGB Representative at partnership@piercegroupbenefits.com.