The Basics of Dependent Care FSA

Caregiver reading to children at daycare.

A Flexible Spending Account is just that – flexible! If you care for children or elderly dependents, the Dependent Care FSA may be right for you.

With this FSA, you can set aside up to $10,500 in 2021 to pay for child or elder care expenses on a pre-tax basis. Here are the details:

  • Eligible dependents include children younger than 13 and a spouse or other individual who is physically or mentally incapable of self-care and has the same principal place of residence as the employee for more than half the year.
  • Expenses are reimbursable if the provider is not your dependent.
  • You must provide the tax identification number or Social Security number of the party providing care to be reimbursed.

You can participate in the Dependent Care in addition to the Healthcare FSA, even if you don’t elect any other benefits. Unlike the Healthcare FSA, reimbursement from your Dependent Care FSA is limited to the total amount that is currently deposited in your account. This account covers dependent day care expenses that are necessary for you and your spouse to work or attend school full time.

Illustration of a daycare worker with children in front of plants.

Eligible expenses include:

  • In-home babysitting services (not provided by a dependent)
  • Care of a preschool child by a licensed nursery or day care provider
  • Before- and after-school care
  • Day camp
  • In-house dependent day care

Due to federal regulations, expenses for your domestic partner and your domestic partner’s children may not be reimbursed under the FSA programs. Check with your tax advisor to determine if any exceptions apply.

Content by Lockton Dunning Benefits