DCFSA Guide
Turn Caregiving into Tax Savings
Keep more of your hard-earned money. Plan your spending, know the rules and unlock amazing tax savings.
What is a Dependent Care
Flexible Spending Account?
DCFSAs are tax-advantaged accounts that let you use pre-tax dollars to pay for eligible dependent care expenses. A qualifying ‘dependent’ may be a child under age 13, a disabled spouse, or an older parent in eldercare.1
Why choose us?
Am I eligible for a Dependent Care Flexible Spending Account?
Eligibility requires a DCFSA offered through your employer. DCFSAs can be combined with a standard FSA or an HSA. DCFSAs do not impact HSA eligibility.
Five DCFSA rules you need to knowHow do I sign up?
You can sign up for a DCFSA during your organization’s annual enrollment period.
Plan your spending
It pays to be strategic.
Pay for dependent care expenses
Babysitter
Daycare
Preschool
Summer Day
Camp
Before or
After School
Programs
Elder Day Care
Your savings can add up fast
Here’s an example based on $4,500 annual spending and a 30 percent effective tax rate.
Daycare
$300/mo.
+
Summer camp
$500
+
After school program
$50/mo.
Annual tax savings3
$1,350
DCFSA savings calculator
Discover the full power of your DCFSA. Just input your planned spending and watch the savings add up.
Calculate my DCFSA tax savingsMake your elections
Once you choose an annual contribution, your employer will deduct that amount pre-tax in equal parts from each paycheck. DCFSA funds are made available only as money is added to the account.
DCFSA Annual Contribution Limit
Tax year |
Individual and family limit4 |
|---|---|
2021 |
$5,000/$10,500* |
2022 |
$5,000 |
* = appended by American Rescue Plan Act
Know the rules
Don’t get caught by surprise. Carefully review your open enrollment materials.
Timing matters
You only have one year to spend your DCFSA money. Unused funds are forfeited to your employer—usually at the end of the plan year.
Five DCFSA rules you need to knowGrace period
Some organizations offer an additional 2 ½ months to spend DCFSA funds at the end of the year. Note that grace periods vary by plan design. Confirm with your employer the rules for your plan.
Limited Election Period
Elections can only be made during open enrollment unless you have a qualifying life event,5 which may include changes to:
Employment
status (Including
medical leave)
Marital status
Number of
dependents
Daycare closures
No double-dipping
You can’t get reimbursed twice for the same expense (example: reimbursement + deduction from tax returns).
We make it easy to get reimbursed:
 |
Pay for your products or services |
|
Upload your receipts online or in the mobile app |
|
Choose reimbursement by check or have funds deposited directly into your bank account |
Want more?
Check out these additional resources.
DCFSA Webinar
Check out our webinar to discover what expenses are covered and strategies to maximize your annual savings.
DCFSA: Turn Caregiving into Tax Savings
A Dependent Care Flexible Spending Account (DCFSA) enables you to use pre-tax dollars for qualified dependent care expenses. Join our short webinar to discover what kind of expenses are covered and strategies to maximize your annual savings.
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1Optional provision: The Consolidated Appropriations Act (CAA) 2021, temporarily allows for an eligible employee to be reimbursed expenses for dependents through age 13 (i.e., dependents who have not yet turned 14) for the 2020 plan year. To qualify for this relief, you must have been enrolled on or before January 31, 2020 and you must have unused amounts from the 2020 plan year. In addition, you must have one or more dependents who attained the age of 13 during the 2020 plan year. You may also take advantage of this relief for the next plan year if unused grace period amounts from the 2020 plan year or other funds carried over into the 2021 plan year. Please refer to your plan documents or employer communications to determine if this option is available under your plan.Return to content
2Accounts must be activated via the HealthEquity website in order to use the mobile app.Return to content
3The example used is for illustrative purposes only; actual savings may vary. The figure is based on average tax rates, including state, federal and FICA taxes.Return to content
4If Married Filing Separately your limit is $2,500.Return to content
5Please refer to your plan documents for more information.Return to content
HealthEquity does not provide legal, tax or financial advice. Always consult a professional when making life-changing decisions.
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