Dependent Care Flexible Spending Account

What Does Dependent Care Flexible Spending Account Mean?

A dependent care account is similar to a health savings account, but it is specifically designated for paying care-related expenses, such as preschool, after-school programs, and childcare.

Insuranceopedia Explains Dependent Care Flexible Spending Account

A dependent care account is a type of flexible spending account (FSA) that functions similarly to health savings accounts (HSAs) and health reimbursement arrangements (HRAs). However, unlike HSAs and HRAs, dependent care accounts are typically offered with more traditional health plans. Additionally, funds in a dependent care account do not expire at the end of the plan year.

A dependent care account can be used for expenses related to the care of a child up to age 12 or a disabled dependent, with no age limitation for disabled children.

As of 2015, these accounts have a contribution cap of $5,000. Contributions made to the account are not subject to taxation.