FSA/Dependent Care Accounts

[jackie011]

Please explain these things to me like I'm 5. Now that we're expecting we're probably going to set up something (pre-tax, right?) for the new year. But, are they the same? What if I don't spent that amount? Do I lose it? DH is a Fed, if that matters. I work for a non-profit and have heard all of my coworkers moan and groan about our HR person who manages these accounts, so we'd probably just have DH (who makes 2x my salary) set it up at his job.

Thanks!

[GailGoldie]

I didn't set it up until after my son was born - was too worried that God forbid, something happened, we'd lose the money.

it's taken out tax free- up to 5K/household. Considering we spent over 20K/year in daycare, the past 3 years, we never worried about not meeting the total.

There is a medical FSA that takes out money pre-tax to use for medical costs -- it can be hard to figure out how much to take out- you need to know what you'll spend b/c it is use or lose. many people will take out more if they know they are getting surgery that year, etc.

The dependent care FSA is different- it's used only for that, dependent care - and needs to be a licensed facility or care taker with a specific tax ID. I'm not 100% sure if you use family, etc - I think you can use it if they are claiming all their income from you - with their SSN - but since i never dealt with that might be totally off- someone will correct me if I am

They will take out what you choose (ie- 5K divided by how many paychecks you get in a year). You can submit for reimbursement at any time- but will only get back what is in the account at the time. Ie- if I spend 5K in child care by April and submit- I will get a lump check sent to me for what is in the account- and then checks every couple weeks for what gets added each pay period. We just submit at the end of the year for the lump sum- b/c we usually put that towards something... sort of a stupid way to "save" for us- but it works so we don't spend it.

hpoe that all makes sense.

find out if you have a qualifying event (birth of a child) if you can THEN add it on.... if so- that is what I'd do- wait until the child is born.

[jackie011]

Lots of good information- Thank you so much!

We're hoping to use family for childcare until the new year (2014) so we'd probably wait on setting that up until after July, anyway. The FSA is probably something we should have been doing for years as I spend $300+ on contacts each year and DH takes a few monthly medications that aren't filled by our mail order (so more $$ than average).

[jackie011]

Thank you all so much! Our *hope* is that our moms (and DH taking a delayed paternity leave) will come and help us get through the rest of 2013 (after I have to go back to work) before we have to start using a day care center. My mom is on board (she says right now, of course that could change by October) and MIL doesn't even know we're pregnant yet. She's retiring as of 12/31 and has done nothing but hound DH for grandchildren, so I can't see that being much of a stretch for her! Obviously, we'll have a Plan B, as you never know how things will pan out down the road.

Sounds like it's in our best interest to set up these accounts, at the very least once the baby is born for both. We do make more than $44K, so it's good to know that's better for us, tax wise.

[ssmjlm]

If your DH is a fed, he can't sign up for the dependent care account until baby is born and then it's a "life event." Also if you won't need care until 2014, then he can just do it during open season next fall.

For the FSA that's for any health related expenses, although open season ended for the feds on Dec. 10, so unless he already signed up he'll have to wait.

I don't know who your health ins is through but I have the BCBS basic federal and this baby is 100% covered, so we'll have no OOP expenses.

[MamaMaui24]

If you plan to breastfeed, nursing supplies are considered medical expenses and FSA $ can be used. This includes breast pumps (rental and purchase), freezer bags, breast pads, extra pump supplies and possibly a hands free pumping bra. I've even seen a Boppy on the drugstore,com nursing FSA page.

[drloretta]

Yes, it's pretax

No, it's not the same.

FSAs are for things like co-pays for dr visits, prescription medications, or other approved medical-related costs.

Dependent care spending accounts are for childcare

You typically calculate how much you think you'll spend, and set aside that amount (or close to it) to be taken out of your paycheck. If you don't spend it all, it typically goes away. Hence the reason DH is going for an eye exam and new contacts next week, to eat the remaining $250 of our FSA.