Dependent (Day) Care Flexible Spending Account
A participant can set aside money on a pre-tax basis to pay for eligible dependent day care expenses for qualified dependents. These expenses must be necessary in order for a participant (and spouse, if married) to work. The amount that can be set aside each year is a minimum of $100 up to:
- $5,000* if the participant is single, or married and filing tax returns jointly;
- A total amount of $5,000* together if the participant's spouse has a dependent care Flexible Spending Account through his or her company; or
- $2,500* if the participant is married but files separate tax returns.
* These are the maximum contributions allowed for dependent care expenses under current IRS rules.
Participants must make an annual election each year. Dependent (Day) Care Flexible Spending Account elections cannot automatically roll over into the next plan year.
If a participant or spouse earns less than $5,000, the combined amount that the participant and spouse can contribute may not exceed the amount of the lower salary.
If a participant is married but has a spouse who is a full-time student or is disabled, the IRS considers the spouse's earned income to be:
- $250 a month if the participant has one qualified dependent; and
- $500 a month if the participant has two or more qualified dependents.
Under the Dependent (Day) Care Flexible Spending Account, a qualified dependent is:
- A child under age 13 whom the participant claims as a dependent on his or her federal income tax return;
- A participant's spouse who is physically or mentally incapable of self-care; or
- Any other dependent who is physically or mentally incapable of self-care, whom the participant claims as a dependent on his or her federal income tax return, and who normally spends at least eight hours in the participant's home each day.
Once enrolled in the Dependent (Day) Care Flexible Spending Account, a participant generally may not change the amount he or she contributes to the account, unless the participant experiences a qualified status change. See Changing Coverage (Qualified Status Changes) in the Participating in the Plan section for more information about qualified status changes.
In addition, a participant may change the amount he or she contributes when there is a change in providers, a change in child care or adult care costs or a general change in his or her care situation.
Generally, any dependent care expense that the IRS allows as a deduction on income tax returns is eligible for reimbursement, provided it is not reimbursed from any other source. This includes expenses incurred for anyone a participant is entitled to claim as a dependent on his or her tax return, regardless of whether that dependent is covered under Leidos' medical, dental or vision plans.
Expenses for registered domestic partners and dependent children of registered domestic partners are not eligible for reimbursement under the Dependent (Day) Care Flexible Spending Account.
Below are examples of eligible dependent care expenses. This list is meant to provide only a summary of eligible expenses.
- Care at a licensed nursery school, day camp, or day care center;
- Services from individuals who provide dependent care in or outside a participant's home, unless the provider is the participant's spouse, own child under age 19, or any other dependent;
- After-school care for children under age 13;
- Household services related to the care of an elderly or disabled adult who lives with a participant; and
- Any other services that qualify as dependent care expenses under IRS regulations.
For a detailed list of eligible dependent care expenses, please refer to IRS publication 503, (called "Child and Dependent Care Expenses") available from your local IRS office, or visit the IRS web site.
Below are examples of ineligible dependent care expenses. This list is meant to provide only a summary of ineligible expenses:
- Expenses for food, clothing or education (unless incidental to the care);
- Registrations fees;
- Expenses for overnight camp;
- Expenses for transportation between a participant's house and the place that provides day care services, or the cost of transportation for a care provider;
- Expenses for dependent care when either the participant or his or her spouse is not working or is not looking for work;
- Charges for convalescent or nursing home care for a parent or a disabled spouse;
- Expenses paid to the spouse, a participant's own children under age 19, or any other dependents; and
- Expenses for which a federal child-care tax credit would be taken.
Another way to reduce dependent care expenses is to take a tax credit when filing an income tax return. However, a participant may not contribute to a Dependent (Day) Care Flexible Spending Account and take the tax credit for any expenses reimbursed through the Dependent (Day) Care Flexible Spending Account.
With the tax credit, a participant can claim a deduction for a percentage of eligible dependent care expenses (the same expenses as defined for the Dependent (Day) Care Flexible Spending Account). The total expenses that you may use to calculate the credit may not be more than $3,000 (for one qualifying individual) or $6,000 (for two or more qualifying individuals).
The tax credit percentage applied to eligible expenses decreases as a participant's adjusted gross income rises. Generally, if a participant's family income is greater than $24,000 per year, the Dependent (Day) Care Flexible Spending Account will save more in taxes than the child care income tax credit. However, the advantages of the Flexible Spending Account or the tax credit depend on a participant's overall tax situation and should be discussed with a tax adviser.
Participants must pay for eligible dependent day care expenses, save the receipts, then file a claim for reimbursement from their accounts. Unlike with the Health Care Flexible Spending Account, a participant may receive reimbursement only up to the balance available in his or her account at the time the claim is filed.
- Request Reimbursement — Participants will be able to claim funds from their health care flexible spending account online via the HealthEquity member portal. As part of the online process, they can upload the backup documentation and associate them directly to the claim. Most claims are processed within a few days after they are received and payments are sent shortly thereafter. Participant will receive a check in the mail if they do not set up their direct deposit information with HealthEquity. To set up direct deposit, complete the Direct Deposit form and submit to HealthEquity. You also have the option to complete a paper claim form and submit it directly to HealthEquity for reimbursement.
- Pay Provider Online — Participant can pay many of their eligible healthcare expenses directly from their health care flexible spending account without filling out paper claims forms. Just enter the provider's name and other requested information with the backup documentation and payment will be sent directly to the provider.
If participants have concerns about how a claim has been administered, or wish to appeal a claims decision, complete the Claims Appeal form and submit to HealthEquity. Additional information on relevant procedures is available in the Plan Information section.
If You Leave the Company
If you leave the Company during the year, any contributions you are making will stop and you have until April 30 of the following plan year to submit claims for reimbursement for any remaining Dependent Care Account balance. You will not be reimbursed for any eligible expenses incurred after your date of termination.