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.