Asked and Answered: How does elder care work with a dependent care FSA?

If you're responsible for the care of your parents as an adult or another dependent adult loved one, you know that the costs associated with caring for them can take a toll on your wallet. If you have a dependent care FSA (DCFSA), you're probably curious as to exactly how reimbursing those cost might work and wondering exactly what expenses are eligible.

Who is eligible?

In order to claim reimbursement for elder care expenses, your dependent elder must live with you for at least eight hours a day, and they must be claimed as a dependent on your annual tax returns. They must also be incapable of self-care. All claimed expenses need to be related to care for the dependent, because they're the ones that allow you (and your spouse, if applicable) to remain at work, school or actively seeking gainful employment.

In other words, you can't be your elderly loved one's full-time caretaker while not working and still claim reimbursement of their expenses.

What expenses can be reimbursed?

As a caretaker, there are a lot of different expenses that you may encounter while caring for an elderly loved one. Your elderly loved one may need more advanced care such as a personal care attendant who comes in and assists with the functions of daily living - like bathing, taking medication, cooking, or just getting around from place to place.

They also may need assistance when getting to and from medical appointments, or even just running errands. As long as the dependent is unable to care for themselves, the cost of these caretakers is eligible for reimbursement.

Part of the cost of elder care expenses can also involve being placed in a care facility for a certain amount of time during the day because they can't be left alone for an extended period. So if you drop off your elderly loved one at an adult care facility or a similar program, you can claim these expenses.

In order for these expenses to be claimed, however, you'll need to claim each expense individually. It's important to note that you'll probably need medical documentation to claim these expenses. It's always a best practice to keep receipts and records of any expense associated with your DCFSA to avoid problems down the road (and we always advise speaking with your plan administrator on exactly what types of documentation you'll need ahead of incurring expenses).

What isn't included?

If an expense isn't directly related to the care of the dependent so that you can work or study, the expense won't be eligible for FSA reimbursement. That means you can't claim meals or supplies on your FSA. If the expense is directly related to extended medical care, such as full-time nursing home care or in an assisted living facility, those expenses will not be eligible under your DCFSA.

The most important thing to remember is that the care provided by any professional must be provided for the purpose of you being able to continue to work, study, or search for work. So if you were going on vacation and need somebody to care for a loved one full time while you're gone, you cannot claim those costs as an expense since it's at your leisure.

From FSA basics to the most specific account details, in our weekly Asked and Answered column, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.


FSA Friday - 4/27/18 - Summer camp with a dependent care FSA? Yes, it's eligible!

Depending on where you live in the U.S., spring sure took its time getting here. But at our offices in New York City, this week represented 2018's first real taste of warmer weather. (We hope...)

We don't spend a lot of time covering dependent care FSAs on these pages, but summer is always a good time to see if this account is right for your family. Why? Because summer day camp is an eligible expense for dependent care FSA holders!

It seems strange to be thinking about cookouts and and camp songs on a site built around health and financial wellness, but the dependent care FSA is a great way for people to set aside tax-free money toward any relevant care costs -- including daycare and camp. And it looks like the warm weather has the media thinking about these things, too, based on the headlined below.

Camps & Schools: Affording Summer Camp - Marilyn Campbell, Connection Newspapers

A recent study by the RAND Corporation, a nonprofit, global policy firm, shows that voluntary summer programs like daycamp have a significant, positive impact on low-income students during a time when they fall behind their wealthier peers both academically and socially.

Their research also shows that children benefit from learning social and behavioral skills in different settings with new peers.

The problem comes from accessibility and cost. Many parents looking for assistance during the summer may not realize there are programs available to them to offset these expenses. The article suggests parents check to see if a camp participates in U.S. government assistance programs, as well as dependent care FSAs, which are eligible to cover day camps (overnight and sleepaway camps do not apply).

There may still be time to make this happen for the 2018 summer season. But if you miss out now, this is the perfect time to start planning for summer day camp expenses for 2019. And the next article discusses just that...

Open enrollment is a great time to think about summer camp - Kelli B. Grant, CNBC

Once we started thinking about how planning is key to maximizing our FSAs, we were reminded of a great piece from last year's open enrollment season, in which the author highlighted how a little foresight at open enrollment can offer a huge win come summer camp season.

While you might not be thinking about s'mores when holiday music is already being played in stores, there are some significant savings to be had the following year.

If you already have a dependent care FSA, you're likely aware you can set aside up to $5,000 in tax-free funds for child care expenses for 2018 (as long as the child is under 13 and both parents are either gainfully employed or seeking gainful employment). But if you were saving for summer expenses, chances are you needed to make that decision at open enrollment the previous year.

Camp and other summer child-care costs can be a big line item for working parents. Though prices vary, summer day camp programs accredited by the American Camp Association average $314 per week. Using a dependent care FSA can help parents save an average of 30% on these services, while also reducing your overall tax burden.

For the latest info about your health and financial wellness, be sure to check out our Learning Center, and follow us on Facebook, Instagram and Twitter.


Can I submit a claim to my dependent care FSA for children’s classes at Parks and Rec? i.e. tumbling/gymnastics, etc.?

By its design, a dependent care flexible spending account (DCFSA) is designed to allow workers to set aside pre-tax 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. Day camps, such as soccer, football, ballet, etc. are eligible with a DCFSA, provided that they enable the account holder to be gainfully employed, seek gainful employment or go to school full-time. Classes have the potential to be eligible, but on a case-by-case basis. If you can prove that these Parks & Rec classes allow you to work, seek work or pursue an education, they will most likely be covered by your benefit.