Dependent care flexible spending account (DCFSA)

Significant savings

The example scenario below provides estimated DCFSA savings based on a family health plan and a 20% combined federal and state tax rate. Amounts shown are the maximum allowed by the IRS. Your company or provider may allot a lower amount for your DCFSA plan.

child care expenses

$5000

tax savings

$1000

Estimate your annual needs and tax savings

Tax savings worksheet

How do you qualify?

To qualify for a dependent care flexible spending account (DCFSA), dependent care must be essential for you and a spouse, if applicable, to work, look for work or attend school full-time.

To be considered qualified, dependents must meet one of the following criteria:

Children under the age of 13
A spouse who is physically or mentally unable to care for him/herself
Any adult you can claim as a dependent on your tax return that is physically or mentally unable to care for him/herself

How it works

With a DCFSA, you are able to make pre-tax payroll contributions to pay for dependent care expenses.

Determine the amount to contribute for the year

The maximum annual DCFSA contribution allowed is $5,000 per household. Unlike medical flexible spending accounts, your annual DCFSA funds aren't available up front. Funds are only accessible as they are deposited with each payroll deduction.

Pay dependent care costs

Pay your dependent care costs out-of-pocket and get a receipt.

Use it or lose it

DCFSA funds do not roll over year after year. You must use your DCFSA dollars within the plan year or they will be forfeited.

Submit for reimbursement

You can submit for reimbursement through HealthEquity’s member portal or by using the DCFSA reimbursement form.

Recurring DCFSA claims can be scheduled for the duration of the plan year. For more information, please contact our expert friends at 866.346.5800.

Dependent care expenses

Eligible expenses*

Babysitter inside or outside household
Before and after school or extended day programs
Custodial childcare or eldercare expenses
Day camps
Daycare centers
Household employee whose services include care of a qualifying person
Late pick-up fees
Looking for work-expenses
Nanny expenses
Preschool/nursery school for pre-kindergarten
Sick-child care center
Summer day camps

Ineligible expenses*

Educational/tuition expenses
Expenses paid to child of participant
Field trip expenses
Food, clothing, education or entertainment expenses
Household services
Incidental expenses
Overnight camp
Payments for care where you are not the custodial parent
Payments for care while on a leave of absence, maternity, or other medical leave
Payments for care while you are on vacation or due to illness
Payment for services not yet provided

Remember

Remember to save all receipts, which are required for reimbursement and validation of expenses.

HealthEquity offers an easy-to-use Documentation Library that allows you to upload and store receipts within the member portal.

*See the complete regulations and list of qualified and non-qualified medical expenses in IRS Publication 503 - Child and Dependent Care Expenses.

Nothing in this communication is intended as legal, tax, financial, medical or marital advice. Always consult a professional when making life changing decisions. In addition to restrictions imposed by law, your employer may limit what expenses are eligible for reimbursements. It is the members' responsibility to ensure eligibility requirements as well as if they are eligible for the plan and expenses submitted.