Eligibility

Employees who need custodial care for an eligible dependent so that the employee and spouse can work (or go to school full-time) qualify for a dependent care reimbursement account. If married, the spouse must work or be a full-time student. The annual amount submitted for reimbursement cannot exceed the amount earned by the lower paid spouse. For a full-time student, an income of $200 per month for one dependent, $400 for two or more, is assumed.

Allowed Expenses

Expenses must be for the care of a dependent that is 12 years old or younger and the employee must be entitled to a deduction for this dependent under IRS Code Section 151(e) or expenses for care must be for a spouse or dependent who is physically or mentally incapable of caring for him or herself. Expenses for services needed to run the home by a housekeeper or maid are covered if they are partly for the well being and protection of the dependent. Expenses for food, clothing, education or entertainment for the dependent are not covered. Kindergarten is not an eligible expense.

Payment for Services

Payment for services cannot be made to a person who is claimed as a dependent or to a child if the child is under age 19. The provider can be a relative who is not a dependent, even if the provider lives in the employee’s home. If the services are provided for a disabled spouse or dependent outside the employee’s home, the disabled spouse or dependent must spend at least eight hours each day in the employee’s home. A provider who cares for dependents who are under age 13 and who care for more than six individuals must comply with all state and local laws at the provider's location. 

Types of Daycare Providers

Eligible types of daycare providers are:
  • Licensed daycare centers.
  • Private preschool programs.
  • Home-based licensed day cares.
  • Public or private before school and after school programs.
  • Private sitter in your home or theirs.
  • Public or private summer day camps.
  • Nursery schools.
  • Kindergarten is not an eligible expense.

In order to claim expenses as a tax credit, the social security number or federal tax number of the provider must be submitted.

NOTE: Church-sponsored day care centers are not required to provide a tax number. Dependent care expenses must satisfy eligible criteria for a dependent care reimbursement account as outlined in Section 129 of the IRS code.

Accounting Rules

There is a $5,000 maximum contribution limit per calendar year. Working couples can contribute a combined total of $5,000 to this account. Deductions cannot exceed the earned gross income of the lower paid spouse unless the spouse is a full-time student or is disabled. Reimbursements cannot exceed the amount that is in the account when the request is made. Participants have 90 days after the end of the plan year to submit all claims. For dependent daycare, the service deadline remains December 31 of the plan year; expenses must be incurred within the current calendar year. Kindergarten is not an eligible expense.

Understanding an FSA

Healthcare and dependent day care reimbursement accounts can decrease the amount of taxes you pay on your income by allowing you to set aside pre-taxed income for eligible expenses. An FSA is authorized by the IRS and available through your employer.

  • Enrollment: You must re-enroll every year during Open Enrollment if you wish to continue an FSA.
  • 2023 Limits: You may allocate a maximum of $3,050 to your healthcare FSA and a maximum of $5,000 to your dependent daycare FSA. If your spouse also has flexible spending accounts, you and your spouse may both allocate the maximum $3,050 amount to each of your health care FSAs and a combined total of $5,000 to your dependent day care FSAs. This includes spouses that both work at OU. 
  • Reimbursements: As you incur healthcare or dependent day care expenses throughout the year, you may submit a claim for those expenses to get reimbursed with tax-free dollars from your FSA account. A debit card is available for healthcare expenses.
  • A healthcare FSA account reimburses you for out-of-pocket expenses, meaning those expenses that are not covered by your medical, dental, prescription, or vision programs. These expenses include deductibles, co-pays, coinsurance, and certain over-the-counter (OTC) expenses.
  • The dependent daycare FSA account reimburses you for expenses you incur to allow you and, if married, your spouse to work. These expenses include daycare, before-and after-school programs, nursery school or preschool, summer day camp, and even adult daycare.
  • Eligible Items: Take a look at the eligible expenses for either a healthcare or a dependent day care account.
  • Documentation Requirements: As required for all FSA providers, Optum Financial (formerly ConnectYourCare) may request documentation from you to remain compliant with IRS regulations. Remember, keep your receipts and Explanations of Benefits from your providers for every claim you make to Optum Financial (formerly ConnectYourCare).
  • Deadline Reminders: You may incur health care FSA expenses until March 31 of the following year and dependent care expenses until Dec. 31 of the plan year. You have until April 15 to submit eligible claims for both. Reminder: Any money left at the end of the FSA period cannot be refunded according to federal law. 

Click here to see an infographic that describes the differences of a Flexible Spending Account and a Dependent Care Flexible Spending Account. 

Dependent Daycare FSA

Click here to see an infographic that describes the Dependent Care Flexible Spending Account.

NOTE: Reimbursement timing and plan years are different than the health care FSA.

 

Eligibility

Employees who need custodial care for an eligible dependent so that the employee and spouse can work (or go to school full-time) qualify for a dependent care reimbursement account. If married, the spouse must work or be a full-time student. The annual amount submitted for reimbursement cannot exceed the amount earned by the lower paid spouse. For a full-time student, an income of $200 per month for one dependent, $400 for two or more, is assumed.

Allowed Expenses

Expenses must be for the care of a dependent that is 12 years old or younger and the employee must be entitled to a deduction for this dependent under IRS Code Section 151(e) or expenses for care must be for a spouse or dependent who is physically or mentally incapable of caring for him or herself. Expenses for services needed to run the home by a housekeeper or maid are covered if they are partly for the well being and protection of the dependent. Expenses for food, clothing, education or entertainment for the dependent are not covered. Kindergarten is not an eligible expense.

Payment for Services

Payment for services cannot be made to a person who is claimed as a dependent or to a child if the child is under age 19. The provider can be a relative who is not a dependent, even if the provider lives in the employee’s home. If the services are provided for a disabled spouse or dependent outside the employee’s home, the disabled spouse or dependent must spend at least eight hours each day in the employee’s home. A provider who cares for dependents who are under age 13 and who care for more than six individuals must comply with all state and local laws at the provider's location. 

Types of Daycare Providers

Eligible types of daycare providers are:
  • Licensed daycare centers.
  • Private preschool programs.
  • Home-based licensed day cares.
  • Public or private before school and after school programs.
  • Private sitter in your home or theirs.
  • Public or private summer day camps.
  • Nursery schools.
  • Kindergarten is not an eligible expense.

In order to claim expenses as a tax credit, the social security number or federal tax number of the provider must be submitted.

NOTE: Church-sponsored day care centers are not required to provide a tax number. Dependent care expenses must satisfy eligible criteria for a dependent care reimbursement account as outlined in Section 129 of the IRS code.

Accounting Rules

There is a $5,000 maximum contribution limit per calendar year. Working couples can contribute a combined total of $5,000 to this account. Deductions cannot exceed the earned gross income of the lower paid spouse unless the spouse is a full-time student or is disabled. Reimbursements cannot exceed the amount that is in the account when the request is made. Participants have 90 days after the end of the plan year to submit all claims. For dependent daycare, the service deadline remains December 31 of the plan year; expenses must be incurred within the current calendar year. Kindergarten is not an eligible expense.

Healthcare FSA Debit Card

The Optum Financial (formerly ConnectYourCare) Card is a debit card that electronically accesses your healthcare account to pay for eligible expenses when you check out at a store or medical provider.

  1. Participants who use the Optum Financial (formerly ConnectYourCare) Card take advantage of four key benefits:
    • Immediate payment of your expenses from your healthcare account;
    • Increases your personal cash flow;
    • No claim filing due to point-of-sale approval;
    • Ease of use of your pre-tax funds.
  2. Where can you use it? You can use the card at qualifying merchant locations wherever MasterCard is accepted. Qualified merchants include physician and dental offices, vision providers and merchants who have implemented an inventory information approval system (IIAS).
  3. Online Claims at Optum Financial (formerly ConnectYourCare) makes filing non-debit card claims fast and easy.
  4. Direct Deposit is encouraged for reimbursement of non-debit card claims including reimbursements for dependent daycare. Visit the Optum Financial (formerly ConnectYourCare) website to set up direct deposit.

Click here to a brochure on the uses and benefits of a Flexible Spending Account.