Dependent Care Account

Features of a DCA:

  • Pre-tax money for dependent care expenses can be set aside to pay for childcare and elder care
  • Employees significantly reduce their tax liability, thereby saving money:
    • Consider an employee who elects to place $1000 into a medical FSA and $5000 into a Dependent Care Account. The employee’s gross salary is reduced by $6000. If the total tax rate for this employee is 20%, the employee saves $1200.

Advantages of a Choice Strategies DCA:

  • As DCA funds accumulate in the account as they are reduced from the employees’ salary, the funds needed to reimburse the entire claim amount may not be available
  • Choice Strategies has taken the extra step to provide “on-hold claims”
  • Reimbursement for the claim requested is provided directly after the funds accumulate

Eligible Expenses:

  • Dependent care expenses must be for child or elder care while the employee is at work
  • Must be for custodial care only
  • Custodial care does not include expenses for food, clothing, or education
  • If a daycare provides meals in addition to childcare and couldn’t be separated from the cost of care, it is considered an eligible expense
  • Tuition and classes, as well as babysitters during non-work hours are not eligible

For more information, visit our Member FAQs

Please click here for a one page handout describing the Dependent Care Account.