What Expenses Can Be Reimbursed from a Dependent Daycare Flexible Spending Account?

What Expenses Can Be Reimbursed from a Dependent Daycare Flexible Spending Account?

Dependent daycare flexible spending accounts (dependent daycare FSAs) allow employees to be reimbursed on a pre-tax basis for daycare expenses. Identifying which expenses can be reimbursed from a dependent daycare FSA is an important part of the planning and election process for employees who enroll in this type of plan.

1. The expense must be for the care of the dependent.

The dependent daycare FSA will reimburse claims for expenses incurred to allow the employee to work, attend school full time, or be searching for employment. These expenses can include before and after school care, care provided at a licensed daycare center, summer day camp and a private babysitter.  Preschool is also considered an eligible expense.  Amounts paid for kindergarten and other school tuition do not qualify for reimbursement because the primary purpose is for the education of the child and not the care of the child.

2. The expense must be for a child under the age of 13.

Generally speaking, once a child turns 13 expenses paid for their care can no longer be reimbursed from a dependent daycare FSA. The exception to this rule is when a child or other dependent is not capable of self-care and requires additional care.  A note from a doctor stating the specific medical condition as to why the care is needed is required in order to be reimbursed for expenses for dependents age 13 and older.

3. The expense is not eligible for reimbursement until the care has been provided.

Even if payment is required before the care has been provided, the expense will not be reimbursed until the dates of service have occurred.

 

It is important to understand which expenses can be reimbursed pre-tax from the account.  Specific rules for each plan can be found in the Summary Plan Description.

 

BusinessPlans, Inc. – myCafeteriaPlan does not intend to provide legal or tax advice and information contained in this article should not be interpreted as such. Regulations governing pretax plans are often open to interpretation and should be reviewed with your legal or tax advisor before making any decisions regarding your plan.

Posted 3/24/17

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