A Dependent Care Flexible Spending Account (DCFSA) is a type of tax-advantaged savings account where you can set aside pre-tax dollars to pay for qualifying dependent care expenses. These are expenses that allow the employee to be employed and/or look for work.
DCFSAs are regulated by IRS Publication 503. They are not subject to Section 125 (ERISA) requirements.
The account is post-funded, meaning that funds are only available to an employee once deductions are made through payroll. Pre-tax deductions are taken from the employee’s payroll throughout the year and those deductions will be available that same day.
If your Dependent Care FSA is managed by Gusto, visit your Gusto Benefits Card Manager portal to see your balance and submit claims.
| Filing status | 2022 | 2023 |
| Married and filing jointly (the employee and their spouse cannot together exceed this limit) | $5,000 | $5,000 |
| Single parent | $5,000 | $5,000 |
| Married and filing separately | $2,500 | $2,500 |
Dependent Care FSA funds can be used on care for qualified dependents that assist an employee in working or looking for work.
For a comprehensive list of eligible expenses in addition to what makes a dependent “qualified” See IRS Publication 503
Examples of eligible expenses:
Examples of ineligible expenses:
Who’s eligible
Any employee who's eligible to participate in health benefits with your company is eligible to participate in the Dependent Care FSA. This means:
Who’s ineligible
To set up a DCFSA through Gusto, your company must also have Gusto-brokered medical insurance. If you already have benefits with Gusto, you can add a DCFSA at your next renewal.
If you offer a DCFSA through a third party, you can set up payroll deductions for your enrolled employees.
Pricing to offer a DCFSA through Gusto:
The increased dependent care FSA contribution limits under the American Rescue Plan Act of 2021 (ARPA) is an optional increase for employers that offer a dependent care FSA.
The ARPA increased the dependent care FSA contribution limits from $5000 to $10,500 for the calendar year 2021. Read more about the new law that’s bringing important changes to FSA rules.
If you have a dependent care FSA with Gusto, we’re unable to support the limit increases at this time. This means employees cannot increase their election amounts for the remainder of 2021 if your DCFSA is managed by Gusto.
If your employer is offering a Dependent Care Flexible Spending Account (FSA) to you, you may enroll in that plan from your Gusto account. Follow the steps below to enroll or waive coverage:
After the benefit's effective date, you can find your plan details in the Benefits section of your account. There you'll also find your plan document, which explains DCFSA rules and how to use your benefits. You can file and manage claims in your Gusto Benefits Card Manager.
The annual amount chosen during your enrollment is locked in for the remainder of the company’s policy year. Dependent Care FSA amount cannot be changed unless you experience a valid qualifying life event, like a change in day care needs. Learn more about QLEs here.
If you are experiencing a qualifying life event and believe that you are eligible to make changes to your Dependent Care FSA election please reach out [email protected] for assistance.
If you want to change your contribution, you can only lower it to the amount that you've already contributed.
When an employee leaves the company, their Dependent Care FSA is terminated on the last day of employment. Both dismissed employees and current employees who terminate their DCFSA (whether due to a qualifying life event or if the employer discontinues the plan) have a 90-day runout period.
Runout period: An employee has 90 days from the last day of the plan (the last day of employment, for dismissed employees) to submit claims for any eligible services rendered prior to the last day of employment, but after the effective date of the Dependent Care FSA.
You can see your last day to submit claims in your Gusto Benefits Card Manager, by clicking into your Dependent Care FSA and looking at the “Deadlines” Section.
If you didn’t register for your Gusto Benefits Card Manager account during your employment, please reach out to [email protected] for your credentials.
After the 90-day runout period, any remaining funds left in your account are forfeited to the employer. Since DCFSAs are linked to the company's bank account, the funds remain there.