What expenses are eligible?The Med-FSA covers most medical, dental and vision expenses and you can include the expenses of your qualified dependents, even if they are not covered under your group insurance plan. Eligible expenses for the Med-FSA are services, supplies and treatments that are medically necessary and prevent or treat illness or disease. Effective January 1, 2013, the maximum Med-FSA benefit will be $2,500 or less, depending upon your plan design. The $2,500 limit will be subject to cost of living adjustments annually after 2013. For a listing of eligible medical expenses, please click here.
Dependent Care Assistance Plan
What is eligible day care?Expenses that are for the care of your "qualified dependent" while you (and your spouse, if married) are gainfully employed. This includes preschool, sitters, day care centers, elder care and day camps. If your care provider works in your home, you are required to withhold taxes. If a day care center cares for more than six persons (other than persons who live there), the center must comply with state and local regulations.
Who are "qualified dependents"?A child under the age of 13 or any age if permanently and totally disabled. For divorced or separated parents, the child is treated as a qualifying person only for the custodial parent. For more information on the requirements for a qualified dependent, please refer to IRS Publications 501 and 503.
What expenses are not eligible?Day Care expenses while you (or your spouse) are not working due to a leave of absence, vacation, after work hours, etc. are not eligible. Overnight camp, educational expenses, kindergarten, and expenses such as field trips, food, and clothing are also not eligible. Day care expenses are not eligible if paid to anyone you claim as a tax dependent or your child under age 19, even if they are not your tax dependent.
What are the contribution limits?The limit is $5,000 if you are single or head of household. Married couples that file a joint tax return are limited to $5,000, and married couples that file taxes separately are limited to $2,500. Your DCAP contributions cannot be greater than your taxable income or that of your spouse, if married. Other requirements and limits apply if your spouse is a full-time student or disabled and unable to care for the children.
Do I report my Day Care?The IRS requires that you complete either Form 2441 or Schedule 2 with your annual tax return to report your DCAP Participation. Your Employer will report your DCAP contributions on your W-2 as an information item.
DCAP & the Tax CreditMost families earning more than $30,000 will find greater tax savings in the DCAP than with the Tax Credit. The Day Care Tax Credit expense limit is $3,000 for one dependent or $6,000 for two or more dependents. If you have two dependents in day care and pay $6,000 or more per year, you can participate in the DCAP for $5,000 and take the Tax Credit on the "extra" $1,000 of day care expenses. The tax credit eligible expense may be limited to $2,400 for one dependent or $4,800 for two or more dependents in 2013 unless Congress authorizes an extension to the tax credit increase.
Premium Only Plan
How does the POP work?Easy! When you enroll in the Premium Only Plan (POP), your employer deducts your premiums from your pay, tax-free. If your insurance premium costs change during the year, your contributions will change automatically. If the costs increase, you may change to another, less expensive plan if available from your employer but you cannot drop coverage during the plan year.