Dependent Care Flexible Spending Accounts (DCFSA) are a creative benefit that can promote work-life balance, increase employee engagement and save money for both employees and companies.
Although useful, DCFSA employee benefits are still only offered by fewer than half of private-sector employers through employee benefits packages. Even where they’re offered, they’re often overlooked by employees. Often, the issue isn’t whether DCFSA accounts are useful. Employees just don’t know how to use them.
A thorough Frequently Asked Questions (FAQ) resource can help your employees understand their care benefits and encourage them to enroll.
Before deciding whether they should enroll in your DCFSA benefit, employees are likely to ask quite a few questions. Below are some of the more common questions about DCFSA benefits that you can include in your onboarding program.
A Dependent Care FSA is an employer-sponsored benefit that allows you to set money aside on a pre-tax basis to pay for dependent care eligible expenses. Eligible expenses are expenses for the care and protection of children under the age of 13 and other dependents who live with you and cannot care for themselves.
Dependent Care FSA funds must be used for work-related expenses for the care and protection of your dependents. This does not include healthcare-related expenses. Healthcare FSA funds, on the other hand, should be used for healthcare-related expenses, like deductibles, prescription medication, or menstruation products.
You can sign up for a Dependent Care FSA during open enrollment or when you’re hired. There are also qualifying events that allow you to enroll at another time, including changes in marital status, the number of eligible dependents you have, or the cost or availability of care.
Open enrollment is the period of time when all employees can enroll in or make changes to their employer-provided benefits. Common benefits include health and dental insurance, 401(k) plans, and of course, Dependent Care FSAs.
Our Dependent Care FSA open enrollment is from [insert enrollment period].
Employees can contribute a maximum of $5,000. If an employee is married and filing taxes separately, then both spouses would be able to contribute $2,500.
Generally, employees have to use their Dependent Care FSA funds during the plan year. This is called the “use it or lose it policy.” The IRS allows a short grace period at the end of the plan year to help employees spend unused funds.
Yes. Both you and your spouse can have a Dependent Care FSA through your respective employers. However, contributions from you and your spouse cannot exceed the IRS’s limit, even if you’re filing taxes separately.
Once employees sign up, they may not be sure how to use Dependent Care FSA funds. These are good questions to cover in onboarding, but they may also come up down the road.
Dependent Care FSA funds can be used only for the care of qualifying persons. This includes:
If you’re divorced and can’t claim your child as a dependent, your child is still a qualifying person if:
DCFSA funds can only be used for eligible expenses. To be an eligible expense, it must be work-related and its main purpose must be for the care and protection of a qualifying person. Below are common DCFSA eligible expenses:
Once enrolled, employees typically can’t make changes to their contribution amounts. The following are special situations that would allow you to change your contribution:
To get your DCFSA reimbursement, file a claim through our DCFSA benefit provider. After you submit your claim, keep your receipts and make sure they contain the following information:
DCFSAs are one of the best company benefits to offer that won’t break the bank. Successful onboarding experiences and clear FAQs help increase DCFSA utilization, but it’s not enough. At Helpr, we make DCFSA implementation and administration easy, with our in-app DCFSA tool.