Real Money: Why a DCFSA can be a huge win for parents

If you're a parent, maximizing on childcare costs is important, considering this line item on your budget is probably one of the most expensive. Many take advantage of what's known as a dependent care FSA, or DCFSA - this account covers child care for children up to 13 years old, where a traditional FSA is aimed at covering qualified medical expenses.

Getting a DCFSA is great considering the tax benefits and the ability to use pre-tax money, but are there other ways to cut on childcare costs? In other words, are there alternatives in case your costs are higher than what the DCFSA maximums are, or do you want to enroll your child in programs that are not considered qualifying expenses?

Whatever your reason for wanting to save money, here are a few ways to save big on childcare costs.

Share a nanny

Hiring a nanny on your own can be notoriously expensive but it doesn't have to be if you share one. You and a trusted friend or family member can hire one nanny to help out with your children while you work. Yes, you can claim your share of the cost as a qualified expense under a DCFSA.

While it sounds strange to share a nanny, more people are choosing to go this route. You may be surprised that some nannies are happy to split their time amongst those in the neighborhood as it usually means more pay for them.

Nannies may have different requirements like a maximum number of children, hours or how close in age these children need to be. But if you're patient, you can often find the right fit for everyone. The perk is that your nanny gets more money, and you're paying less since you're splitting costs.

Do babysitting swaps

On that note, swapping babysitting duties is a great way to save since you're not paying for childcare, except with your time. If you get clever, it won't be much more time than if you were to watch your own. For example, if you work a 9 to 5, find someone to watch your kid during the day and you can watch theirs during the evenings or weekends.

To start a swap, try to find a few parents so there are more spaces and opportunities to fit everyone's needs and schedules. Make sure to create a system where it's fair and equitable for all — if you watch someone's child for two hours, someone else needs to watch your child for the same amount of time.

Create more flexibility in your work schedule

If none of the above options appeal to you, consider making changes to your work schedule if you are able to. A common method for parents is to try and arrange a remote work arrangement, even if it's for a few days a week. That way, you don't have to pay more for childcare — like before and after school programs.

If you have a partner, see if you can both do the same thing so that there's more opportunity to work from home. For example, one of you watches your child in the mornings and you switch in the afternoons. However, be mindful of your work requirements so that you can make that meeting without needing to constantly attend to your child's needs.

Working remotely isn't always an option and doesn't always work with younger children with more demanding needs. However it doesn't hurt to ask for partial arrangements like working shorter hours in the office and doing the rest of your work at home if it will work for you.

You can only claim money from your DCFSA for childcare expenses while you're working — so if you end up working part time, you may not be able to spend as much from your account. Check with your account provider on what their rules and regulations are so you're on the up and up about what your obligations are.


Whether you budget week-to-week, or plan to use your FSA for bigger things, our weekly Real Money column will help you maximize your flex spending dollars. Look for it every Tuesday, exclusively on the Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.

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