Workplace Benefits

What Is a Dependent Care FSA (DC-FSA)?  

3 min read May 23, 2023

Whether it’s daycare for children or support for elderly family members, we want to ensure those who depend on us have the care they need.

Dependent care flexible spending account (DC-FSA) can help you save on care expenses for your family members because contributions help reduce your taxable income and aren’t subject to federal or state income tax.  Let’s take a closer look at dependent care FSAs, how they work, and how you might be able to benefit from this type of account. 

How does a dependent care FSA work? 

You’re only able to enroll in a DC-FSA if your workplace includes it as part of your employee benefits package. If that’s the case, you can sign up during open enrollment or for a qualifying life event (QLE). You just have to decide how much to contribute.  

You typically can pay dependent care expenses with a debit card connected to your DC- FSA funds or out of pocket. You submit proof of payment for those qualifying expenses and file a claim for reimbursement via your DC-FSA.

What is the dependent care FSA limit? 

According to the National Institutes of Health, you can contribute up to $5,000 each year if you’re married and file jointly with your spouse, or if you’re a single caretaker for a dependent. Married applicants who file separately are limited to a maximum of $2,500 in annual contributions.1

What happens if I don’t use all my account funds during the year? 

It’s up to your provider whether your DC-FSA balance carries over to the next year. Typically, funds aren’t allowed to roll over year-to-year, and it's recommended you use your savings before the year is over.

In 2021, the Internal Revenue Service (IRS) allowed greater flexibility for rolling over unused FSA funds. As a result, employers have one of two options for unused FSA funds. The first is to offer employees a grace period of up to 2.5 months to spend the remaining funds. The other option is to allow participants to roll over a maximum amount at the end of the year— as of 2023 the carryover amount is $610.2

Be sure to check with your FSA provider to better understand how these policies apply to your account.

What happens if I change jobs, lose my job, or retire? 

To be eligible for reimbursement, your expenses will need to be incurred before your termination date or final day on the job. Following this date, you’ll still be able to apply for reimbursement until the account’s funds are depleted. 

Your employer might institute a claim period that restricts reimbursement after you’ve started working for a new employer. Before your last day at work, be sure to ask your employer about their FSA reimbursement period policy. 

What are dependent care FSA-eligible expenses? 

Your DC-FSA funds can only be used for necessary child (younger than 13) and adult care services.2

Here are a few examples of dependent care FSA-eligible expenses: 

  • Daycare
  • Summer day camps
  • Nanny or babysitter expenses
  • After-school care
  • Caregiver transportation
  • In-home nurses
  • Institutional-setting care

Again, these expenses can only be reimbursed by a DC-FSA if the primary caretaker is required to use a service due to a work commitment. However, if the primary caretaker went on vacation, for example, expenses related to dependent care during that period wouldn’t qualify for reimbursement.

Bottom line: Saving money on dependent care 

Dependent care FSAs can be an essential benefit for caretakers looking to save on their monthly bills. By setting aside pre-tax dollars, these accounts can help you better manage your finances, while reducing your taxable income.  

If your employer offers DC-FSAs, be sure to talk to your HR department and FSA provider to get a better understanding of your plan’s enrollment process, contribution limits, and eligible expenses.  

Learn about MetLife Health Savings & Spending Accounts 

Designed to help you save

Nothing in these materials is intended to be, nor should be construed as, advice or a recommendation for a particular situation or individual. Participants should consult with their own advisors for such advice. Federal and state laws and regulations are subject to change.

1 “Flexible Spending Accounts Program,” National Institutes of Health, 2023 

2 “Child and Dependent Care Expenses,” IRS, 2023