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