What is a dependent care FSA?

A dependent care flexible spending account lets participants set aside pre-tax dollars to help pay for dependent care. Contributing to this benefit reduces taxable income and spreads the benefits of pre-tax dollars throughout the year, helping you save 30 percent or more on your dependent care costs.

It’s a smart way to save money on expenses such as childcare or elderly care for a dependent. In the first of our Benefits Buzz open enrollment series, we break down dependent care FSAs. Watch below for the full podcast episode or keep reading to learn more about these plans. 

Dependent care FSA eligibility

Funds can be used to pay for childcare for children under age 13 when they’re claimed as qualifying dependents. But the savings potential isn’t limited to just childcare. They can also cover care for a disabled spouse or dependent of any age.

To be eligible for this type of FSA when offered through your employer, you and your spouse (if applicable) must be employed, or your spouse must be a full-time student or looking for work.

Big savings potential

Let’s say you enroll and contribute $5,000 per year into a dependent care FSA in 2022. You also pay the average American tax rate of 29.8 percent. By putting that money aside pre-tax in a dependent care FSA rather than allowing the funds to be taxed, you save nearly $1,500 this year!

For married couples who file taxes separately, the 2022 limit is $2,500 per person per year.

Note: Employers may offer these limits, but are not required to. 

Fast and simple reimbursement

If you participate in a dependent care FSA with us, you have two easy options for collecting reimbursement with this type of FSA:

  • Mobile or online reimbursement. You can easily upload documentation to a claim by logging into our NationalHR mobile app, taking a photo of your documentation with your phone’s camera and uploading it. You can also use your app or online account to upload your Reimbursement Request Form. No additional documentation is required if the form is signed by the dependent care provider. Once enrolled, you can find the form in your online account or by searching our knowledgebase.
  • Our Recurring Dependent Care program. If you’re paying for daycare expenses with your account and enroll in this program, you only need to submit one reimbursement form per year for each daycare provider used.