Employees can set aside pretax dollars in a dependent care FSA to pay for the care of children under age 13 and certain older family members. While FSAs typically are funded through employee contributions, employers may contribute to them as well.
Employees may use funds from a dependent care FSA to pay for eligible expenses for
Eligible expenses may include in-home childcare; payments to licensed day care facilities; before- or after-school programs; and adult day care. The IRS requires dependent care expenses to be necessary for the employee or employee's spouse to work, look for work, or attend school full time.
An employer may offer a dependent care FSA to employees who enroll in the PPO or EPO medical option, or employees who enroll in a qualified healthcare plan other than those offered through the Benefits Plan of the Presbyterian Church (U.S.A.).
A minister of the Word and Sacrament employed by a congregation is eligible to participate in FSAs. An employed minister is considered an employee for federal income tax purposes even though he or she is considered self-employed for Social Security purposes (paying SECA instead of FICA).
A self-employed individual is not considered an employee for FSA purposes, and therefore, is not eligible to participate.
Contributions to a dependent care FSA are not subject to federal taxes as long as the funds are used to pay for qualified expenses allowed by the IRS. Unused funds are lost at the end of the plan year, so it is important for employees to estimate expenses carefully each year they enroll in an FSA.
Eligible employees may make dependent care FSA contributions through pretax payroll deductions, up to annual limits set by the IRS. The annual contribution limit for 2019 is $5,000 ($2,500 if married and filing separately).
Employers will be charged $3.90 per employee per month for each employee who establishes a healthcare and/or dependent care FSA. Only one fee will be charged per employee, whether the employee has one type of FSA or both. Further, a leading FSA administrator, will bill each employer directly for this monthly fee. There are no set-up or other annual fees for these accounts.
Employers with FSA-related questions should call Further Employer Support at 855-363-2583 between 8 a.m. and 5 p.m. CT, Monday through Friday, or email them.
For other questions, call the Board of Pensions at 800-773-7752 (800-PRESPLAN).