Previous Article
Next Article

Benefits 101: The Dependent Care Flexible Spending Account

Print Article

If you will be paying for child care in 2012, you might save money by setting aside the funds used for that purpose in a Dependent Care Flexible Spending Account (DCFSA).

The DCFSA allows you to contribute pre-tax earnings into an account. You are then reimbursed from those funds when you produce documentation of eligible expenses.

Here are the basics you need to know when deciding whether to establish a Dependent Care FSA during open enrollment for the 2012 plan year.

Eligible Expenses are determined by the Internal Revenue Service and include:

  • Child care center
  • In-home care
  • Nursery or preschool
  • Au pair services
  • After school care
  • Day camp.

Detailed IRS rules and restrictions apply in determining whether expenses qualify.  Review Ceridian’s materials before opening a DCFSA.

The DCFSA offers reimbursement for the costs of caring for covered dependent children under the age of 13 and other dependents who cannot be left alone while the employee and/or spouse is working or attending school full time. 

There are maximum contribution limits:

  • Eligible faculty and staff members may contribute a maximum of $5,000 per year to fund a DCFSA
  • Employees who are married but file their tax returns separately may only contribute $2,500 per year
  • The combined DCFSA benefit available to a married couple is $5,000 per year.

There is some risk involved and a deadline for reimbursement:

  • Careful planning is essential when establishing a DCFSA because any funds that are not used by the end of the plan year are forfeited by the employee.
  • Eligible services must be received by December 31, although the deadline for submission of reimbursement requests from a Lehigh DCFSA is March 31 following the end of the calendar year.
  • All reimbursement requests for expenses incurred in calendar year 2012 must be submitted by March 31, 2013.

One final note:

Employees should consult a tax advisor to determine if using the DCFSA is more advantageous than the federal income tax credit related to dependent care. You cannot use both a DCFSA and the dependent care tax credit in one tax year.

For more information, read this Interactive Overview from Lehigh’s DCFSA provider, Ceridian.

HR News

Workplace Learning & Wellness Programs

View Full Calendar

Spotlight is published monthly by Human Resources. Please address any comments to Hillary Kwiatek, Spotlight Editor, Human Resources, 428 Brodhead Avenue, send email to, or call extension 85165.

Current and past issues of Spotlight can be viewed and searched at: Past Issues.