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Dependent Care FSA Guidelines

Guidelines for Using Your Dependent Care FSA

Your dependent care flexible spending account is a reimbursement account offered by your employer as part of your benefits package. Enrolling in a dependent care FSA plan saves you money. It allows you to use pre-tax dollars to pay for eligible dependent care FSA expenses, such as day care, preschool, or after-school care for a qualified individual.

IMPORTANT: A dependent care FSA is used to pay for eligible, work-related expenses for the care of a qualified individual, such as day care, preschool, baby sitting expenses, or elder care. It is not used to pay for health care expenses incurred by a qualified individual. You can use a health FSA to pay for health care expenses incurred by qualified individuals.

Participation in a dependent care FSA is your choice. If you decide to enroll, you must satisfy any FSA eligibility requirements set up by your employer. The complete rules and regulations for your plan are available in the plan's Summary Plan Description (SPD).

IRS Regulations

Dependent care FSAs are regulated by IRS rules for FSA plans. Some rules are specific to a dependent care FSA and do not apply to a health FSA.

IMPORTANT: Please review the following information so you are aware of the rules that apply to your dependent care FSA. Use the links below to navigate to a specific section. 

Qualified Individuals
Eligible Dependent Care FSA Expenses
Your FSA Election
Reimbursement Requests
Submitting Reimbursement Requests
Change in Status Events
Unused FSA Funds

Qualified Individuals

Your dependent care expenses must be for qualified individuals, including:

  • Your dependent child under the age of 13 who lives with you for more than half the year
  • Your spouse or other tax dependent who is physically or mentally incapable of self-care and lives with you for more than half the year

If you are divorced, IRS guidelines state that a child is a qualified dependent of the "custodial parent." Only the custodial parent may participate in a dependent care FSA. A divorced, non-custodial parent cannot be reimbursed under a dependent care FSA, even if the divorced parent claims the child as a tax dependent.

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Eligible Dependent Care FSA Expenses

Only eligible expenses can be reimbursed under the FSA. These expenses are defined by the Internal Revenue Code and your employer's plan.

Dependent care expenses must be incurred during the coverage period so you (and your spouse, if married) can work or look for work. Full-time students who attend school for at least five months during the tax year may also incur dependent care expenses. "Work" may include actively looking for work, but it does not include unpaid volunteer work or volunteer work for a nominal salary.

A dependent care FSA covers qualified dependent care expenses incurred for the care of one or more qualifying individuals.

Eligible Expenses

  • Before-school and after-school care
  • Expenses for preschool/nursery school
  • Extended day programs
  • Au pair services (amounts paid for the actual care of the dependent)
  • Baby sitter (in or out of the home)
  • Nanny services (amounts paid for the actual care of the dependent)
  • Summer day camp for your qualifying child under the age of 13
  • Elder day care for a qualifying individual

Ineligible Expenses

  • Amounts paid to your spouse, your child under age 19, a parent of your child who is not your spouse or an individual for whom you or your spouse is entitled to a personal tax exemption as a dependent
  • Expenses related to a disabled spouse or tax dependent living outside your household
  • Educational expenses
  • Tuition for kindergarten and above
  • Food expenses (unless inseparable from care)
  • Incidental expenses (such as extra charges for supplies, special events, or activities unless inseparable from care)
  • Overnight camp

Expenses reimbursed under your dependent care FSA cannot be used to claim any federal income tax deduction or credit.

Need more information or expense examples? Go to our Dependent Care FSA Eligible Expenses page.

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Your FSA Election

The election is your contribution amount - the amount that you put into your dependent care FSA when you enroll. Your employer determines the minimum (if any). The maximum election amount is set by the IRS and is $5,000, or $2,500 if you are married but file taxes separately.

The amount of reimbursement that you receive on a tax-free basis during the plan year cannot exceed your earned income or your spouse's earned income. If you are single, your earned limitation is your salary (minus your dependent care FSA contributions). If you are married, the earned income limit is the lesser of your salary (minus your dependent care FSA contributions) or your spouse's salary.

Your total FSA election amount is deducted from your paycheck in equal amounts throughout the year. You can use your dependent care FSA funds during the plan year as long as funds are in your account.

IMPORTANT: The availability of your election amount differs for a dependent care FSA and a health FSA. With a health FSA, your election amount is available on the first day of the plan year. However, your dependent care FSA funds are only available as the money is deducted from your paycheck.

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Reimbursement Requests

A Request for Reimbursement Form is used to submit a reimbursement claim. After you complete the Request for Reimbursement Form, submit it to CONEXIS along with appropriate supporting documentation.

All dependent care reimbursement requests must include a completed and signed provider certification (noted on the reimbursement form). If you do not have provider certification, complete the reimbursement form and submit an itemized statement from the dependent care provider that includes:

  • Start and end dates of service
  • Dependent's name and date of birth
  • Itemization of charges
  • Provider's name, address, and tax ID or Social Security number

Credit card receipts, canceled checks, and balance forward statements do not meet the requirements for acceptable documentation.

The maximum reimbursement you may receive is equal to the current account balance in your dependent care FSA. If your reimbursement request is more than your available balance, the remaining amount will be placed in a pending status. The pended amount will be paid when additional funds are posted to your account.

Find a Request for Reimbursement Form by logging in to your online account.

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Submitting Reimbursement Requests

You can submit your reimbursement requests three ways.

  • Online: Log in to your online account, download and complete a reimbursement form, and then upload your supporting documentation. You will need access to a scanner to do this.
  • Fax: Submit your completed reimbursement form and supporting documentation using the fax number listed on the form.
  • Mail: Send in your completed reimbursement form and copies of your supporting documentation using the address noted on your form.

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Change in Status Events

Your election cannot be changed during the plan year, unless you experience a qualifying change in status event based on IRS regulations, such as:

  • A change in legal marital status (marriage, divorce or death of your spouse)
  • A change in the number of your dependents (birth or adoption of a child, or death of a dependent)
  • A change in employment status of you, your spouse or dependent
  • An event causing your dependent to satisfy or cease to satisfy an eligibility requirement for benefits

Your requested change must be due to and consistent with the event. You may change or terminate your dependent care FSA election only if:

  • The change or termination is due to and corresponds with a change in status that affects eligibility for coverage under the FSA plan.
  • Your election change is due to and corresponds with a change in status that affects the eligibility of dependent care expenses for the available tax exclusion.

You may also change your dependent care FSA election when an independent, third-party provider (other than a relative) significantly increases or decreases the cost of dependent care or when there is a coverage change, such as using another provider.

IMPORTANT:For more information regarding eligible status change events under your plan, see your Summary Plan Description (SPD).

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Unused FSA Funds

Your FSA contributions are subject to the IRS "use-it-or-lose-it" rule. Any unused funds that remain in your dependent care FSA will be forfeited at the end of the plan year. FSA funds do not rollover to the following year. The unused funds cannot be paid to you in cash or other benefits.

Your FSA plan includes a run-out period and a grace period extension. These features can help you avoid losing funds through the "use-it-or-lose-it" rule.

Run-out Period

A run-out period is a pre-determined period after the plan year ends. During this time period, you may file claims for expenses incurred during the plan year. When the run-out period is over, you forfeit any unused funds. It's an IRS rule.

Example: On December 31 your plan year ends, but your plan includes a run-out period. You have until April 15 to submit claims incurred from January 1 to December 31 of the previous year.

Grace Period Extension

Your plan also includes a grace period extension. This feature creates a grace period that immediately follows the end of the plan year. During this timeframe, you may incur expenses and use the funds remaining in your account to pay for eligible FSA expenses.

The grace period begins on the first day immediately following the last day of the plan year (in your case, January 1), and ends two months and 15 days later (March 15).

Example: Your plan year ends December 31; the grace period is two months and 15 days. Beginning January 1 through March 15 of the following year, you can incur expenses and use the remaining funds left in your FSA.

The grace period ensures that you have the opportunity to maximize your FSA funds and avoid forfeiting money through the IRS "use-it-or-lose-it" rule. You should still carefully estimate your planned expenses based on a 12-month period and make a conservative election based on that estimate.

Remember, the grace period is meant to help you when your expenses fall a little short of expectations. It is not an extension of the plan year that requires an increase in your FSA election amount.

If you terminate your employment during the plan year or you otherwise cease to be eligible under the plan, your active participation in the FSA plan and your pre-tax contributions will end automatically. Expenses incurred after your termination date are not eligible for reimbursement.

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IMPORTANT: The information on this website provides basic information regarding participation in your employer's FSA plan. Our site does not contain all of the rules that are specific to governing your employer's plan. For complete rules and plan information, review your plan's Summary Plan Description (SPD).