Dependent Care                                              Flexible Spending Accounts

A Dependent Care Flexible Spending Account can be used to pay for eligible daycare expenses for children age 12-and-under or for adult daycare expenses for a disabled spouse/dependent. The maximum tax year deduction is $5000 (or $2500 if married and filing separately) per household. The primary purpose of Dependent Care expenses, as defined by IRC § 129, must be for custodial care and allow the employee and their spouse, if married, to be gainfully employed, looking for work or full- time students.

How does it work?

Employees who want to participate in the Dependent Care Flexible Spending Account must enroll in the plan each year. The annual election is divided by the number of payroll cycles during the plan year to determine a per-pay period amount. This amount is reduced from the employee’s income prior to taxes.

When dependent care expenses occur, employees will submit a completed claim form along with appropriate supporting documentation for reimbursement. Employees cannot be reimbursed more than the balance in their account. Claims will be processed within 3-5 business days.

Participants will be issued a check or can choose to have their reimbursement deposited into their bank account. At the end of the plan year, employees will have a run-out period to request reimbursement only for dependent care expenses from the plan year. Any funds remaining in the account at the end of the run-out period will be returned to the employer.

What’s eligible? Ineligible?

Eligible dependent care expenses

  • Before- and after-school care for children 12-and-under
  • Care provided in your home (provider cannot be an IRS tax dependent or a dependent under the age of 19)
  • Home or daycare for eligible disabled IRS tax dependents (must spend at least eight hours per day in your home)
  • Licensed daycare providers
  • Registration Fees (Provided the qualified dependent receives the care)
  • Summer day camps for children 12-and-under (even if overall theme of camp is entertainment or educational in nature)

Ineligible dependent care expenses

  • Payments to a spouse or parent of a qualified individual
  • Educational fees/tuition
  • Overnight camps
  • Food, clothing
  • Care not related to work
  • Transportation expenses provided by parents

Please note: Income tax credits are also available for childcare expenses. To determine whether a flexible spending account or a tax credit is a better choice, employees may wish to consult a financial advisor.

Resources

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Contact us

To receive more information about our services, contact your agent or BenefitHelp Solutions marketing representative by email or phone, 503-412-4210 or 888-387-5440. For specific account information, please contact a Customer Service representative at 503-219-3679 or 888-398-8057.

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