What is a Dependent Care FSA?
A Dependent Care FSA is a pre-tax benefit account used to pay for eligible dependent care services, such as preschool, summer day camp, before or after school programs, and child or adult daycare. It's a great way to save money while taking care of your loved ones so that you can continue to work.
Who is eligible?
There are few restrictions on who is considered eligible for a DCFSA. If your employer offers a DCFSA and you claim a qualified dependent, you're most likely eligible.
You and your spouse must be working, searching for work, or attending school full-time in order to qualify for the DCFSA.
Eligible expenses include:
Services for a dependent that are rendered while an employee is at work or school.
Services for a dependent who is 13 years old or younger, or who is older than 13 and is physically or mentally incapable of self-care.
Get to know more about eligible DCFSA expenses here.
How are DCFSAs funded?
DCFSAs are sponsored by employers, meaning they own the account. Employees contribute most of the funds, but employers can decide whether they want to do some matching (as long as the total account balance doesn't exceed the federally-mandated limit for that plan year).
DCFSAs are typically payroll-funded. You decide how much to contribute to your DCFSA based on how much you plan to spend on dependent care in the upcoming year, then set your annual election based on that amount.
Once you're enrolled, your funds are withdrawn automatically from each paycheck and deposited into your account before taxes are deducted. As soon as your account is funded, you can use your available balance to pay for eligible dependent care expenses.
You can only use the funds that are currently available in your account, not the entire election amount. If you submit a claim for an amount greater than what's currently available, your claim will be put "on hold." You can read more about on-hold claims here.
Yearly contribution limits
For 2023, the IRS contribution limit is $5,000 per household, or $2,500 if married and filing separately.
You can change your contributions during your employer's open enrollment period. Some plans also allow changes to contributions with a Qualifying Life Event such as marriage, divorce, the birth of a child, etc.
What happens to my DCFSA funds at the end of the plan year?
Your employer may choose to offer a run-out date, grace period, or rollover. If you're unsure which options your employer is offering this year, please reach out to Forma's Member Experience Team and we'll be happy to confirm.
You can read about the differences between these options here.
Get to know more about Dependent Care FSAs
DCFSA Claim Guidelines
1. Please provide a document showing the date of service of childcare, program or attendance. This is not the date of payment or billing period. The date of service should be in a To/From format. For example, 1/01/22 -1/31/22.
2. All DCFSA claims must be filed after services have been rendered. This means you would be allowed to file the claim after the service has been completed. Example, Date of service is 1/01/22 - 1/31/22. The earliest you may file a claim for this expense will be 2/1/22.
3. Please submit each expense separately if multiple payments are listed on the same document such as an invoice. You may file a separate claim for each payment with the same document.
4. The following information must be provided on a document to have a claim approved for reimbursement:
A. Provider/School Name
B. Payment Amount
C. Dependent’s Name
D. Date of Service
E. Description of Service - Ex. Preschool, Day Care.
If you have any questions about this, please reach out to our Member Experience Team at email@example.com or send us a live chat message through your Forma mobile app!
For questions regarding pre-tax accounts (HSA, FSA, DCFSA, etc.) you can also reach us by phone at 844-902-2902 Monday through Friday, 8 AM EST - 8 PM EST. We're here to help!