Covid-19 | Member Resource

DCFSA Update

A Dependent Care Flexible Spending Account (DCFSA) allows employees to set aside pre-tax 1 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.

WHAT DOES THIS MEAN FOR YOU?

To qualify, the dependent care must be essential for the employee and spouse (if applicable) to:

  • Work

  • Look for work

  • Attended 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/her

Maximum annual contribution is $5,000 per household

  • Funds must be spent within the plan year or they will be forfeited

Eligible Expenses*

  • Babysitter inside or outside household
  • Day care
  • Looking for work expenses
  • Custodial childcare or elder care expenses

Ineligible Expenses*

  • Babysitter inside or outside household
  • Day care
  • Looking for work expenses
  • Custodial childcare or elder care expenses
FAQs

There have been a lot of changes during this past month as the nation deals with COVID-19. This list will hopefully help you find the answers you need regarding your health accounts and the recent changes.

Have more questions? Contact us.

DCFSA
  • What does the Consolidated Appropriations Act 2021 (commonly referred to as the CAA) mean for my DCFSA?

    The CAA offers employers several options to provide temporary relief to DCFSA holders. The provisions of the CAA include the ability to expand carryover amounts or extend grace period dates for qualifying members and allows employers to temporarily update the age limit for DCFSA eligible dependents from 13 to 14 in some circumstances. The CAA may also allow spend-down of DCFSA funds even if you leave your employer.

    All provisions of the CAA are at your employer’s discretion, so please check your plan details for more information.

  • Is there a difference between dependent care reimbursement arrangements (DCRA) and DCFSA?

    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.

  • Can I change my election amount due to not needing care as I am now working from home?

    The DCFSA election change rules are very broad. Employees may change their respective 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 (e.g., summer day camp cancels or care is no longer needed) the election can be reduced or eliminated.

  • Am I going to lose any funds that I have contributed?

    A DCFSA is typically a “use-it-or-lose-it” account, and IRS regulations prohibit employers from rolling over funds from year to year. However, due to the pandemic, the CAA allows employers to adopt provisions that make the DCFSA more flexible. Please check your plan for more details.