Dependent Care Accounts

Dependent Care Flexible Spending Account

Child and dependent care is a large expense for many American families. Millions of people rely on child care to work, while others are responsible for older parents or disabled family members. Participants in a Dependent Care Account can save on these expenses while they work.

What is a Dependent Care Flexible Spending Account?

A Dependent Care Flexible Spending Account is designed to provide financial support to parents who work full-time and must find care for a dependent child or adult while they are working. Participants can set aside pre-tax funds from their paycheck for eligible expenses.

DCA expenses require that expenditures be “work related” — those incurred while the member or their spouse were working or looking for work. A Dependent Care FSA plan will cover:

  • Child and adult daycare
  • Nanny and babysitting expenses
  • Elderly care
  • Preschool
  • Summer day camp
  • Before- and after-school care

The Internal Revenue Service (IRS) determines the maximum amounts members can contribute to their DCA Plan.

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Advantages of a Dependent Care Flexible Spending Account

Employers can offer employees who have dependents a way to contribute funds for their care while also saving them money. Offering this account type to employees is essentially giving them a 30% discount on their care expenses. Participants will not have to pay Medicare, Social Security or federal income taxes on their DCA contributions, and as a tax-favored vehicle, this money will stay tax-free when used. A DCA also helps participants save money because they will have a larger “take-home” paycheck.

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Features of a Dependent Care Flexible Spending Account with The Difference Card

The Difference Card has simplified benefit solutions by making access to the funds in a DCA easy for members. Participants can use their Difference Card to access their funds by swiping the card or filing for reimbursement. Members can spend up to the amount taken out of their paychecks.

2023 2022
Maximum salary deferral
(single taxpayers and married couples filing jointly)
$5,000 $5,000
Maximum salary deferral
(married couples filing separately)
$2,500 $2,500


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