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Dependent Care

A dependent care reimbursement account (DCRA), also known as a dependent care flexible spending account (DCFSA), allows employees to set aside pre-tax1 payroll contributions to pay for dependent care expenses. Employees pay for dependent care costs out-of-pocket then submit documentation for reimbursement. We understand that in today’s complex environment, your dependent care needs may have changed, so please read on for more information about how you can use and adjust your dependent care account.

COVID-19 information

CARES Act information
COBRA
Commuter
Dependent care
HCFSA/HRA
General FAQs

What you need to know

  • To qualify, the dependent care must be essential for the employee and spouse (if applicable) to:
    • Work
    • Look for work
    • Attend school full time
  • 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 who is physically or mentally unable to care for him/herself
  • Maximum annual contribution is $5,000 per household
    • Funds must be spent within the plan year or they will be forfeited
  • Funds can only be spent on qualified expenses
    Eligible expenses*
    • Babysitter inside or outside household
    • Day care
    • Looking for work expenses
    • Custodial childcare or elder care expenses
    Ineligible expenses*
    • Educational/tuition expenses
    • Household services
    • Overnight camp
    • Incidental expenses

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

Frequently asked questions (FAQ)

Q: Is there a difference between dependent care reimbursement accounts (DCRA) and dependent care flexible spending accounts (DCFSA)?
A: While the name is different, the account type is the same. Whether your account is called a DCRA or a DCFSA is determined by the provider.

Q: Can I change my election amount due to not needing care as I am now working from home?
A: The DCFSA Election change rules are very broad. Employees may change their status if there’s a change in the child-care provider. The change must be consistent with the reason for the change. For example, the provider is no longer providing the care (i.e. summer day camp cancels or care is no longer needed) the election can be reduced or eliminated.2

Q: Am I going to lose any funds that I have contributed?
A: A DCFSA is a use-it-or-lose-it account. IRS regulations prohibit employers from rolling over funds from year to year. Further, balances cannot be refunded; however, they can be used for future dependent care expenses.

1 This is not intended as legal, tax, financial or medical advice. Please consult a tax professional regarding your specific situation.

2 Plans vary by employer, and these changes do not necessarily change the benefits available under your employer's plan. Please review plan documents carefully or consult your employer for information about your company's benefits.