Flexibility is an FSA’s middle name (er, first name). FSA stands for Flexible Spending Account, and it allows employees to pay for certain qualified expenses with pre-tax funds. There are two types of FSAs. One type is called a Health FSA and can be used for medical expenses. The second type is called a Dependent Care FSA and can be used to pay for taking care of your dependents.
Since a Health FSA is for qualified medical expenses, you would not be able to use one to pay for daycare.
A Dependent Care FSA if for qualified, work-related dependent care expenses. Work-related means that it enables you or your spouse to work, or look for work. Here is a list of common expenses you can pay for with your dependent care FSA:
- Summer day camp
- Elderly daycare
- Before- or after-school daycare
This article provides general information and shouldn’t be construed as legal, benefits, or HR advice. Benefits and insurance regulations may change over time and may vary by location and employer size. So, please consult a licensed broker or appropriately certified expert for advice specific to your business’s benefits options.