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Four Things You Need to Know about DCFSA

My name is Jennifer Walker and I work with the Defense Department, in the Office of Personnel and Readiness. I am a Marine Corps veteran and a proud mom of three. I am on a team of awesome individuals who are helping to roll out something called the Dependent Care Flexible Spending Account (DCFSA) Benefit. We are thrilled to offer this benefit to service members for the first time! I recently discussed this benefit on the Military OneSource podcast, and I’d like to go over the finer points here.

If you have children or adult family members that you support, you already know that dependent care is expensive! With Federal Benefits Open Season right around the corner (from November 13 through December 11), the Defense Department is rolling out a new benefit that will provide another financial option to help reduce the burden of dependent care costs. Here are four things you should know about DCFSAs:

1.   It Is a New Benefit for Military Families This Year

This is a new benefit offered to military families by the Defense Department to reduce the burden of dependent care costs for service members and their spouses who are either working, looking for work, or attending school full-time. This benefit helps military families budget for dependent care costs and save money as funds contributed to a DCFSA are pre-tax. Enrollment in a DCFSA is open to Defense Department civilians, regular (active) component service members, and Active Guard Reserve members on Title 10 orders who have dependents with eligible expenses. To learn more about eligibility requirements, visit: https://finred.usalearning.gov/Benefits/DCFSA.

2.   DCFSA is a Pre-Tax Benefit

A DCFSA is a pre-tax account used to pay for eligible dependent care services such as child or adult day care. DCFSAs allow eligible service members and their families to contribute a minimum of $100 and a maximum of $5,000 per household in pre-tax earnings. This benefit lowers taxable income which results in lower taxes – to include federal, state (in most states), and Medicare and Social Security tax. To learn more about DCFSA as a pre-tax benefit, watch the “How DCFSA Works” video.

3.   Eligible Expenses Include Childcare, Preschool, and Care for Incapacitated Family Members

Eligible expenses include before- or after-school programs, au pair care, day camp, elder care, nanny care, preschool, nursery school, sick childcare, and babysitting (work-related only). Ineligible expenses include babysitting (not work-related), school tuition (kindergarten and up), sleepaway camp, tutoring, medical and nursing home care, meals, and activity lessons (e.g., piano, dance). For a full list of eligible and ineligible expenses, visit: https://www.fsafeds.com/explore/dcfsa/expenses.

4.   Military Families Must Enroll During Open Season Unless they have a Qualifying Life Event (QLE)

Federal Benefits Open Season runs from November 11 – December 13, 2023. During this time, service members can elect to enroll in a DCFSA for the 2024 plan year (January 1 – December 31, 2024). If a military family experiences a QLE, such as a change in marital status, deployment, or PCS at any point during the year, they are eligible to enroll outside of the open season period. Enrollees for the 2024 plan year will have a grace period until March 15, 2025, to incur expenses and until April 30, 2025 to submit their claims. Unclaimed contributions will be forfeited after April 30, 2025.

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