Are employees who are eligible for dependent care flexible spending accounts (FSAs) getting all they can from the benefit?
The answer is often no.
A story in Forbes magazine noted that only 3% of eligible employees participate in dependent care FSAs, and 60% of participants maintain the same contributions year after year.
Here’s help educating employees about opportunities they’re missing:
Absences may be covered
In some cases, employees can even get reimbursed for expenses incurred during short-term absences or while working on a part-time basis. The IRS permits reimbursements if:
- the employee already pays for care on a weekly or monthly basis, and
- if the absence is covered under your standard PTO, vacation, and/or sick day policies.
Camps and transport FSAs aren’t designed to cover educational expenses. However, day camp costs are reimbursable, even if the camp is dedicated to a single purpose (e.g., soccer camp). In addition, employees can claim transportation expenses to and from the dependent care location.
