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An Introduction to DCAPs

A dependent care FSA or a Dependent Care Assistance Program (DCAP) is an employer-sponsored account that lets you set aside pre-tax dollars to pay for your day care and other dependent care expenses required to allow you to work.

Eligible expenses

This account allows you to pay for day care expenses for children under the age of 13 and/or other dependents incapable of self-care so you can work

Use a Dependent Care FSA to pay for:

  • Licensed day care facilities
  • Preschool programs
  • After-school programs
  • In-home child and dependent care services
  • Elder care  (dependent care expenses for tax dependents over the age of 13 require proof of medical necessity)
  • Special day camp expenses

you cannot use your Dependent Care FSA to pay for:

  • Overnight camp
  • Kindergarten tuition
  • Lunches and food items
  • Education programs
  • Activity fees

Dependents over the age of 13

There are times when your tax dependent is over the age of 13 and because of a medical reason, requires day care so you can work. The IRS allows reimbursement from the account for these expenses when the following requirements are met:

  • The dependent receiving the care is unable to provide the care themselves due to a physical or mental disability. A letter of medical necessity from a qualified medical professional is required to show there is a medical need for the care.
  • They live in the home more than 8 hours a day
  • They can be claimed as the member’s tax dependent

How it works

  • You enroll in the DCAP offered by your employer.
  • You elect the amount you want set aside from your paychecks over the course of the year. You can't change this amount for the year once you set it unless you experience a qualifying life event (like the birth or adoption of a child or a job change).
  • Contributions are deducted in equal installments throughout the year from your paycheck, so there’s no extra work on your part.
  • Throughout the year, you can use the funds in your DCAP to pay for dependent care expenses. You must wait until the money accrues in your account before you can use the funds. You can choose to reimburse yourself in one lump sum at the end of the year.
  • You must meet the claims submission deadline set by your employer. Any funds unused past that deadline are returned to your employer.
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