Disabled Dependent Care Expenses: FSA Eligibility

Medical expenses for a disabled dependent are eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), health reimbursement arrangement (HRA) and a dependent care flexible spending account (DCFSA), the latter of which is eligible provided that the care if for a qualifying dependent. Disabled dependent care expenses reimbursement is not eligible with a limited care flexible spending account (LCFSA).

What is a dependent care FSA?

A dependent care FSA is a unique employee benefit that allows workers to set aside pretax dollars to pay for eligible care expenses for a child, disabled spouse, elderly parent or other individual listed as a dependent who is physically or mentally incapable of self-care. The minimum and maximum amounts allowed to be contributed to a DCFSA are set by the employer, and the maximum set forth by the IRS is $5,000 for individuals or married couples filing jointly, or $2,500 for a married person filing separately. As opposed to traditional medical FSAs, expenses can only be reimbursed under a DCFSA that fall within a current account balance, which may make it difficult to cover large claims early in a given fiscal year.

Qualified dependents under a DCFSA include children under the age of 13, dependents of any age who are physically or mentally incapable of self-care, and even adults in some cases if they are provided more than half of that person's maintenance costs in a given year. Most importantly, expenses for the care of these dependents is only eligible if these care services enable the account holders/spouses to work, look for work or go to school full-time. If an employee has a spouse that is a stay-at-home mother or father, he or she cannot participate in dependent care FSAs.

What are disabled dependent care expenses?

If an account holder's qualifying dependent is disabled and this disability prevents him/her from self-care, a DCFSA can cover the cost of expenses that will allow the account holder or spouse to work, look for work or go to school full-time. Expenses that are eligible for dependent care reimbursement include amounts paid for services like babysitters and nursery schools, fees for licensed day care or adult care facilities and placement fees for dependent care providers, such as au pairs. Additionally, eligible expenses for dependent care reimbursement include summer day camp for kids under 13, before and after school programs, payment to relatives (above age 19 who is not a dependent) who cares for a qualifying dependent or payment to a housekeeper whose duties also include daycare for a dependent.

Eligibility Table

Flexible Spending Account (FSA) Limited Care FSA Dependent Care FSA Health Savings Account (HSA) Health Reimbursement Account (HRA)

Eligible

Eligible with Rx

Eligible with LMN

Not Eligible

 


AZ-PROD-WEB02 11/20/2017 2:08:21 AM