Dependent Care Flexible Spending Account (DCFSA)
A Dependent Care Flexible Spending Account (DCFSA) is an employer-owned and funded account to which an employee may contribute pre-tax funds that may be used tax-free for eligible dependent care expenses while you (and your spouse, if you file jointly) work, look for work, or attend school on a full-time basis during the DCFSA coverage period.
DCFSA funds do not roll over from year to year — any unused funds remaining in the account following the end of the runout period (90 days following the end of the plan year - usually 3/31) are forfeited. The DCFSA coverage period, or the time in which the employee's eligible dependent(s) may incur eligible dependent care expenses, begins with the opening date of the DCFSA and ends with the end of the plan year, 12/31.
All benefits-eligible employees may enroll in a DCFSA. This account is compatible with all other Purdue funding accounts.
The DCFSA reimburses eligible dependent care expenses for the following who must live in your home at least 8 hours a day:
- Child(ren) under age 13
- Adult dependent(s) incapable of self-care (e.g., spouse, parent, grandparent)
Eligible Dependent Care Expenses
In general, the DCFSA reimburses dependent care that takes place while you (and your spouse, if filing jointly) work or look for work or attend school full-time. Below is a (not all-inclusive) list of examples. For more details, review IRS Publication 503 - Child and Dependent Care Expenses.
- Au pair services
- Babysitting services
- Before- and after-school programs
- Custodial or eldercare expenses, in-home* or daycare center (not medical care)
- Nursery school
- Summer day camp (not educational in nature)
*For care in the home, the provider cannot be the DCFSA participant’s child who is under 19 or anyone that the DCFSA participant can claim as a tax dependent.
Purdue employees may contribute up to the IRS maximum of $2,500 if single or married, filing separately or $5,000 if married, filing jointly for the calendar year to an LPFSA. This election cannot be changed outside of open enrollment without a qualifying life event (see "Qualifying Life Events Impacting the DCFSA" below).
Funds are available to you incrementally with each regularly-scheduled paycheck deduction on a pre-tax basis. If you are paid on an academic year (AY) schedule, your DCFSA deductions will be taken only from your September through April pays. You will not have a DCFSA deduction taken from any summer earnings you may have.
DCFSA Qualifying Life Events
Certain qualifying life events will allow you to add, drop, or change your DCFSA election in the middle of the year:
- Significant change in dependent care cost (may change contribution amount)
- The need for care arises, such as returning to work after maternity leave (may enroll)
- The need for care drops, such as a parent is now able to stay home with the dependent or the dependent reaches the limiting age (may decline)
If you need make adjustments for one of these reasons, please contact email@example.com with the circumstance and your desired change (including the new deduction amount, if applicable) no later than 30 days from the date of your qualifying event.
Accessing your funds
You have multiple ways in which you can access your DCFSA funds — by swiping your HSA Bank debit card, by filing a claim to request reimbursement for an eligible expense paid out of pocket, and by submitting payment to your provider.
FSAs may not pay or reimburse for future or projected expenses. This means in order to get reimbursed for dependent care expenses, the services need to have been provided or received when filing a claim. For example, if you pre-pay for a month of daycare services out-of-pocket, you cannot get reimbursed for your expenses until that month has passed/the dependent has received the services. Similarly, if you pre-pay for a summer day camp, you cannot get reimbursed for your expenses until your dependent attends the camp.
HSA Bank Debit Card
As a reminder, the HSA Bank Debit Card may not be used to purchase future expenses. This is important to keep in mind as many daycare providers require payment upfront before services are rendered. In those instances, you would need to pay out-of-pocket and file a claim for reimbursement (See "File a Claim" below).
Some purchases made by HSA Bank debit card may be auto-substantiated if the provider or merchant uses an inventory information approval system (IIAS) which identifies eligible expenses (most commonly, pharmacies). When a charge is not auto-substantiated, HSA Bank will reach out for documentation.
Debit cards may only be used for the current year’s DCFSA until December 31. You may continue to file claims for reimbursement of eligible expenses incurred in the year your DCFSA was active until 90 days after December 31. For example, you may only swipe your card to pay for a 2020 service until 12/31/20, but you have until 3/31/21 to file claims for 2020 services to get any funds remaining in the account.
See "HSA Bank Debit Card" on the HSA, HRA and FSA page for information and to learn how your card works when you have multiple HSA Bank accounts.
File a Claim
You may file a claim for an eligible expense paid out of pocket at www.hsabank.com or through the HSA Bank mobile app with yourself as the Payee. Log in, click or tap "File a Claim," select your DCFSA, then follow the prompts to submit supporting documentation and enter the claim details. Funds will be reimbursed via direct deposit (if you have enrolled in it with HSA Bank) or check.
Note: Approved claim amounts for more than your DCFSA balance will go into a queue to be paid when additional funds are contributed to your account (i.e., with your next paycheck deduction) up to the amount of the deposit. This process automatically continues until the entire claim has been paid or until the annual election amount has been met.
The IRS requires plan administrators to validate that your DCFSA funds are used only for eligible dependent care expenses; therefore, each of the above options requires substantiation or validation of the eligibility of the expense by means of supporting data or documentation. If HSA Bank requests documentation from you, you will have 45 days to provide it. If documentation is not provided, the amount of your unsubstantiated charge(s) will be reported back to you as taxable income the following year, in keeping with instructions from the IRS.
When submitting a claim for reimbursement, be sure to include a detailed receipt from your dependent care provider, including:
- The date(s) of service or purchase;
- The name of the dependent care provider;
- The service provided; and
- The amount you paid or are responsible for paying.