Daycare FSA ?

[grey56]

If you do one of these, do you have it pay you or pay the daycare directly?  Do you opt for one lump sum once you've accrued the total amount or do you submit claims throughout the year?

We had one for last year and I just now submitted the claim to get the $5K back.  Now I'm thinking it would have been better to have it pay the daycare directly, each week.  Is that a lot of paperwork?

Also, what does everyone do when there are two in daycare?  I did the math and two in daycare is $1770/mo ($215/wk per child, with a 10% discount on the second child's tuition).  Obviously the $5K FSA is helpful but won't even touch what our daycare costs will be.  I would love a second child, but this is really holding us back and I am already 34.  Ideas?  (This might have to be its own thread.)

[Deleted]

We did it in a lump sum last year at the end of the year but this year we plan to submit reimbursements once our daycare spending equals the total we are putting into our FSA. So when that happens I can submit one reimbursement form and then throughout the year get reimbursed as money goes into the FSA. I don't know if we can have it go directly to daycare.

[josieposy]

I don't know about the plan paying the daycare (it's a reimbursement so I'm not sure I understand why it would go that way), but I submit my claims all up front and get reimbursed throughout the year as my check fills that account. Approx $200 goes in every paycheck, and then it pays me back not long after because the claims are already in there.

As for 2 kids, you will have to decide there. I had no choice in the matter and got twins and we pay just over 2k a month now. It's a limited timeframe that you're paying buttloads in daycare costs, but it is painful and costs way more than my mortgage. Our rates go down when they hit 33 mos in Sept. We just make it work.

[Deleted]

We pay daycare, and then we are sent a check every month for the 5k divided by 12.

[everam01]

Ours is around the same cost ($1800 per month) and we submit a reimbursement form every few months. I do know some parents who submit a claim form every month and others who wait until the end of the year and submit for the entire $5K.

[everam01]

Also - I just remind myself that this is temporary. We adjusted our spending and will probably feel like we got a big raise once they are school-aged.

[ECB]

We can't use it to pay daycare directly. I have to submit my claim AFTER the care has been received. I put in for the $$ sporadically throughout the year. Just easier for me, but I put the $$ right into savings.

[Deleted]

Jan 25, 2013 7:56:22 GMT -5 @fivedogs said:

We don't have the option to have it pay the daycare directly (maybe some people do if you have a debit card). It's all reimbursement. I just submit claims every few months and then one in January of the next year.

Exactly this!

[pugz]

If we were at a center we could pay directly using a FSA debit card we were issued, but since we use an in home we pay her by check, get a receipt, and then submit it for reimbursement. I plan to do this monthly since the money is coming out of dh's paycheck and I'm writing checks from our bank account to pay the provider.

[drloretta]

It pays us, not the daycare.

It's our first year doing it. I'll probably submit stuff quarterly or so

No idea about 2 at the same time. But I'd probably take the "it's better than nothing" approach

[arch01]

we pay DC and submit for a reimbursement. this year we're using the reimbursement to go toward his 529 since it's money we essentially never had.

[CallingAllAngels]

We pay the day care at the beginning of the month and get reimbursed each month $416.66 after H gets paid.  We send in the paperwork with our receipts every month for the first four months of the year, and we usually are to $5K by then.  We do have a FSA debit card we could pay the day care with, but our center doesn't accept credit cards, so that's not an option.

We have had two in FT day care for the past 2.5 years.  Fortunately, we pay much less than many people ($1232.50/month) for excellent care.  I don't really have any ideas on how to afford two in day care other than make more money or spend less money on other stuff. 

[savan]

We do a lump sum in January. I just submitted our claim for last year.

As far as 2 in daycare, we use an in-home which keeps the cost down, and we have the income to afford it. I've always looked at daycare like our mortgage. It's a necessary bill that has to be paid every month and our spending money comes from what is left over.

[Deleted]

It would make no sense for me to use it to pay the daycare because its less than 1/3 of what my daycare costs. I can actually charge daycare on my CC, so I get a ton of airline miles.  I already pay $17,500 a year for one.  

I submit receipts as I go along, and by April I reach the $5,000 limit in charges for daycare- but of couse doesn't accrue that in my FSA since they take out 208.33 every pay period. So it works out that starting in May, I automatically get the $208.33 reimbursed in my checking account a few days after each pay period.

I don't know why people wait for the lump sum, its letting someone else hold on to your money tax free when you can be using it for yourself much earlier. I guess the same rationale that people have the government overwithhold on their taxes?

When #2 rolls around, nothing will change except that we'll hit the max by February, so I'll start getting those regular deposits without having to submit anymore earlier. joy.

[grey56]

cosmos, can you explain in a little more detail about how you have that set up? I would like to pay the daycare as I go along b/c like you said, I don't want to have someone holding onto my money. Thanks!

[definitelyO]

We have a debit card for the FSA so could use it to pay day care - but unlike the health FSA you actually have to have the funds in there already to use it. So - I pay daycare on my cc and get points/cash back and then submit reimbursements monthly. Basically the money is deducted from my check and then deposited into my bank account.... I agree with Iheartcosmos - makes no sense to me to have someone else holding onto my money.

[Deleted]

Jan 25, 2013 10:48:40 GMT -5 grey56 said:

cosmos, can you explain in a little more detail about how you have that set up? I would like to pay the daycare as I go along b/c like you said, I don't want to have someone holding onto my money. Thanks!

It's really not that complicated.

My daycare charges my credit card and I pay my CC bill as usual. That's how they get paid.

Every month, my daycare gives us an itemized receipt of charges. I submit that to my FSA plan on the forms they provide.  

I get my paycheck 2x a month, and firm takes out $208.33 every paycheck. This gets deposited in my FSA. After I submit my receipt to the FSA, when money is available, I get reimbursed in my checking account (this is how I have the FSA set up- you'd need to talk to your HR or whoever about direct deposit from the FSA).

Since I hit $5,000 in daycare expenses by April or so, I stop submitting receipts then because it doesn't matter- I can't get more than that $5,000. But I continue to get reimbursed from the FSA every time it gets funded with that $208.33 from my paycheck.

It comes out to $208.33 twice a month (total- $416.66 a month, $5000 a year).  I use this to partially fund my IRA.

[Deleted]

We only have the option of paying daycare and getting reimbursed.

I try to wait until our costs have reached $5k. Then I make one claim. I get the lump sum of what has already been withdrawn and then continue to get direct deposits each pay period as the money is withheld.

With two in daycare, we just pay. The FSA helps, but the amount is low. You will qualify for a small portion of the child care tax credit with two, but that's not much either. 

You either pay for daycare, find cheaper daycare (not a good option), have only one child, or wait until your older child starts kindergarten to have your second.

[Deleted]

One more option is to make more money.

[egishere]

We use a nanny. Can we also take the child care credit or is there an income limit? We pay taxes and everything is on the books. Just curious. I'm definitely going to do the FSA once they go to daycare or pre school.

[kitty]

Similar to pp, I wait until April when I have accrued more than 5K of receipts and then submit them all at once. I immediately get back everything that has been paid in and then for the rest of the year I get back exactly what is going in at every paycheck.

Two in daycare for me is going to be close to 3k per month. I've just resigned myself to working just for my 401k.

[Deleted]

Jan 25, 2013 11:33:48 GMT -5 egishere said:

We use a nanny. Can we also take the child care credit or is there an income limit? We pay taxes and everything is on the books. Just curious. I'm definitely going to do the FSA once they go to daycare or pre school.

Child care credit is different than FSA. 

www.irs.gov/uac/Ten-Things-to-Know-About-the-Child-and-Dependent-Care-Credit

[auberge]

Just curious. Is the amount still 5k for two kids or is it per child?

[lizrd7579]

I just send my receipt from daycare in the day I get it. Once the month is complete, I start getting reimbursed and will get reimbursed throughout the year. Like pp, I only get what's been taken out of my paycheck. I'd rather get reimbursed right away so I can put that money towards saving for something. Last year, it went towards savings for maternity leave.

[egishere]

Jan 25, 2013 11:44:02 GMT -5 @iheartcosmos said:

Jan 25, 2013 11:33:48 GMT -5 egishere said:

We use a nanny. Can we also take the child care credit or is there an income limit? We pay taxes and everything is on the books. Just curious. I'm definitely going to do the FSA once they go to daycare or pre school.

Child care credit is different than FSA. 

www.irs.gov/uac/Ten-Things-to-Know-About-the-Child-and-Dependent-Care-Credit

I know they are two different things. Thanks for the link though. Looks like we will be able to take advantage of it.

[ufcasey]

Jan 25, 2013 11:44:41 GMT -5 auberge said:

Just curious. Is the amount still 5k for two kids or is it per child?

It's 5k per family. So doesn't matter how many kids you have, you can only contribute up to 5k for your family.

[popple]

Daycare charges our CC weekly, then we pay the CC back using the FSA about twice a month. The rest of it gets paid back to our CC from our checking account (so we don't spend all of th $5K right away).

Daycare costs are around $12K a year.

[Deleted]

We pay daycare, then get reimbursed.

I plan on doing the reimbursement monthly, though.

[Ashley&Scott]

It pays us directly, every pay period. $208.33 like Cosmos said.

We only have to fill out the form once for the whole year, we put the dates of care as 1/1/13-12/31/13 & the daycare provider signs it. The DC director suggested filling out the form this way & it's been great.

[niq]

Is there a separate FSA for child care vs health care? I'm looking at some of the IRS documents and it's not super clear...

Sent from my Nexus 7 using proboards