HR Guide: Sample Dependent Care FSA FAQ
Dependent Care Flexible Spending Accounts (DCFSA) are a creative benefit that can promote work-life balance, increase employee engagement and save money.
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.
DCFSA FAQs and Sample Answers
Common Questions During Employee Onboarding
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.
How does a Dependent Care FSA work?
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.
What’s the difference between a Dependent Care FSA and a Healthcare FSA?
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.
How do I sign up for a Dependent Care FSA?
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.
When is Dependent Care FSA open enrollment?
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 your Company’s open enrollment period.]
How much can I contribute to my DCFSA?
Before the Covid-19 pandemic, employees could 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.
Last year, the federal government temporarily increased the maximum contributions for DCFSA accounts from $5,000 to $10,500, or $5,250 for every married person filing taxes separately.
What if I don’t use all my Dependent Care FSA funds?
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.
Covid-19 Exception
Recent Covid-related relief legislation allows leftover funds from 2020 to roll over into 2021. Employees with leftover funds in 2021 can also carry those over to 2022.
Can my spouse and I both start a Dependent Care FSA?
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.
Helping Employees Use Their DCFSA Funds
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.
Who is a “qualifying person” for DCFSA purposes?
Dependent Care FSA funds can be used only for the care of qualifying persons. This includes:
- Your children under the age of 13.
- Dependents, including adult dependents, who are mentally or physically unable to care for themselves and lived with you for more than half the year.
- A spouse who was mentally or physically unable to care for themselves and lived with you for more than half the year.
What if I’m divorced and can’t claim my child as a dependent?
If you’re divorced and can’t claim your child as a dependent, your child is still a qualifying person if:
- the child was either under 13 years old or unable to care for themself;
- the child received over half of their support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, are separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year;
- the child was in the custody of one or both parents for more than half the year; and
- you were the child’s custodial parent.
What can Dependent Care FSA funds be used for?
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:
Caretakers, Home Care, Other Adult Care
Work-related expenses to care for qualifying adults are DCFSA eligible expenses. This includes expenses for caretakers, day programming, among others.
Preschool
Preschool for young children is generally considered an eligible expense. Schooling from kindergarten on, however, is not eligible.
After-School Programs
After-school programs are eligible expenses as long as they are work-related expenses.
Nannies and Babysitters
Paying for nannies or babysitters to care for qualifying persons is a DCFSA expense as long as they’re work-related. Weekend care or babysitting at night for non-work-related reasons are not eligible.
Backup Care
Backup care is care given to qualifying persons when the employee’s usual care plan falls through. Employees can pay friends or family who help out using DCFSA funds.
Can I change my DCFSA contributions after open enrollment?
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:
- Marriage, divorce, or death of a spouse
- Birth, adoption, or death of a dependent
- Change in cost or coverage of care
- Change in a dependent’s eligibility
- Change in your or your spouse’s employment status
How Do I Get Reimbursed for DCFSA Eligible Expenses?
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:
- Date of service
- Cost
- Name of the care provider
- Name of the qualifying person
- Type of service
Download this Dependent Care FSA FAQ Sample
Need Help Implementing Your Dependent Care FSA Benefit?
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.
Use Helpr to Increase DCFSA Utilization
At Helpr, we make DCFSA implementation and administration easy. As a global care provider and user-friendly software solution, Helpr establishes the care infrastructure companies need to increase DCFSA Utilization.
