BESTflex Plan Help


Dependent Care Flexible Spending Account FAQs

Answers to Frequently Asked Questions

Q

What is a Dependent Care Flexible Spending Account (DCFSA)?

A

A Dependent Care Flexible Spending Account (DCFSA), like the BESTFlex Plan, is a feature of an employer’s Cafeteria Plan offered to employees which allows you to save money by allocating pre-tax funds in a special account. These funds are used to pay for custodial care for your dependents (child or adult) while you work.

Q

What advantage is there to paying dependent care expenses from a separate account?

A

Dependent Care Flexible Spending Accounts (DCFSAs) are considered tax-advantaged plans. The money is taken out of your paycheck before taxes. This results in a significant tax savings for you and your employer.

Q

How do I use the DCFSA to pay for dependent care expenses?

A

You must pay the daycare provider up front and submit a claim to the DCFSA Administrator (Such as Employee Benefits Corporation or your HR department). You will be reimbursed for the amount on the receipts you submitted. Remember that you must have funds available in your DCFSA to be reimbursed.

One way that Dependent Care FSAs work differently from Health Care FSAs in that the expense is only reimbursable after the service has been provided. [The logic behind this IRS rule is that child care is not guaranteed for the future — if your current childcare provider goes out of business and you have to find a different childcare solution, the dollar amount will likely be different.]

Q

Is there a limit how much money I can put in my DCFSA?

A

Yes. The maximum amount depends on your tax filing status and changes yearly. If you file your taxes as “Single,” or “Married, filing jointly,” that amount is $5,000 per standard calendar year for 2016. If you file your taxes as “Married, filing separately,” the 2016 amount is $2,500 per standard calendar year.

Q

I didn’t end up using all the funds in my DCFSA account. Does any of it roll over to the next year?

A

It does not roll over, per the IRS use-it-or-lose-it rule.

Q

May I use the full amount of the funds elected to deposit in my DCFSA account prior to having the funds deducted from my paycheck?

A

No. Unlike HCFSA accounts, you may not use funds you have not paid into the account. The money you have for your DCFSA is only usable once it has been deposited via payroll deductions.

Q

How long do I have to wait before submitting my next claim for reimbursement?

A

You may submit claims as frequently as you would like. Weekly, biweekly, monthly.

Q

I have a Health Care Flexible Spending Account (HCFSA) from my employer. Can I pay for child care expenses from that fund?

A

No. The IRS has separate regulations that cover HCFSAs and DCFSAs. Check out your My Company Plan for complete information on your plan – available by logging into your account at www.ebcflex.com

Q

I submitted a claim from my BESTflex DCFSA in advance but have not received my reimbursement. Why haven’t I been reimbursed, even though many dates of childcare service have already passed?

A

BESTflex DCFSA claims are not reimbursed until after the last day of service listed. For example, if you date-span your request to encompass 8 weeks, your payment will not be issued until the last day of week #8. To be reimbursed quicker, file each week as a separate item on your claim.

Q

My employer has a runout period for our plan. What does this mean?

A

The runout period means that you may continue to submit claims for your expenses until the end of the runout period. Check your SPD to see if your Plan has one.

Q

Can I ever change the amount deducted from my paycheck for the DCFSA?

A

To change a DCFSA election legally, you must experience a Qualifying Event. These include changes in marital status, change in number of dependents, employment status change for you or your spouse, a dependent becoming ineligible, or change in residence for you, your spouse, or a dependent. An additional circumstance would be if your care provider significantly decreased or increased their rates during the plan year. (The provider cannot be a relative for this circumstance to be eligible.)

Q

If my daycare provider’s rates change, can I adjust my DCFSA contribution amount to be on-target with my expenses?

A

Check My Company Plan. It is available when you log into your account at www.ebcflex.com.

Q

My babysitter is the child’s grandmother. Can I get reimbursed from my DCFSA if I pay her for the babysitting?

A

Yes. The important thing to note in these types of transactions is that the person being paid for the babysitting must claim the exact amount as taxable income. The person babysitting also must not be anyone you or your spouse claim as a dependent.

Q

The babysitter is the child’s 18-year-old brother. Can I get reimbursed from my DCFSA if I pay him for the babysitting?

A

No. Children under 19 years of age may not be reimbursed for babysitting from the DCFSA. The person babysitting also must not be anyone you or your spouse claim as a dependent.

Q

My child needs tutoring, so instead of paying for childcare during certain hours, I am now paying for him to be at the tutor. Can I use my DCFSA funds to pay tutoring expenses?

A

Unfortunately you may not use DCFSA funds for tutoring because it is considered an educational expense.

Q

I am sending my child to an Arts & Crafts Day Camp. Can I pay with my DCFSA?

A

Yes. Day camps are an eligible DCFSA expense.

Q

I am sending my daughter to overnight summer camp for 5 weeks. Can I pay with my Dependent Care FSA?

A

No, unfortunately overnight camps are not reimbursable by a Dependent Care FSA. (Even if the camp separates out daytime activity expenses, no part of an overnight camp is a reimbursable expense.)

Q

My elderly father is now living with me. If I take him to an adult day care facility would the DCFSA cover the expenses?

A

Yes! IRS rules state the DCFSA may be used for adult daycare providing all these criteria are met: 1) The person is mentally or physically incapable of caring for themselves. 2) The person is your spouse, child, or dependent adult. 3) The person has the same principal place of abode. 4) The person spends at least 8 hours per day in your home.

Q

I have hired a caretaker for my father to visit our home for a few hours while I am at work. Would the DCFSA cover the caretaker expenses?

A

Maybe! If you and your spouse are both employed, you can be reimbursed for in-home care per IRS rules. DCFSA may be used for care if all these criteria are met: 1) The person is mentally or physically incapable of caring for themselves. 2) The person is your spouse, child, or dependent adult. 3) The person has the same principal place of abode. 4) The person spends at least 8 hours per day in your home.

Q

My father now needs an in-home nurse for his care instead of the caretaker. Can I continue to pay for this with the DCFSA?

A

No. The nurse would be considered a health care expense.

Q

My wife resigned from her position at her job, and is now unemployed. She is not sure whether she will look for another job or go back to school. My two sons really like daycare because of the fun activities and all their friends there. Can I continue paying for daycare with my DCFSA funds?

A

No. DCFSA is only applicable when both you and your spouse are working full time, your spouse is a full-time student, or your spouse is actively seeking work (researching and applying for jobs, attending interviews, etc.)

Q

My son is 13 years old and I would like to continue the positive relationship he has with his longtime after-school caretaker by continuing to reimburse the expenses with my DCFSA. Is that allowable?

A

This would not be allowable due to the IRS rule stating the dependent child must be under age 13, unless he is physically or mentally unable to care for himself.

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