Manage your Dependent Care FSA (DCFSA)

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:

• All full-time employees are eligible.
• If your company offers medical insurance to part-time employees, they're eligible.

Who's ineligible

Per the IRS, some individuals are not eligible to contribute to a DCFSA:

• Variable employees
• Seasonal employees 
• Contractors 
• Owners taking owner’s draws 
• 2%+ shareholders of an S corporation

Dependent Care FSA funds can be spent on care for qualified dependents that allows an employee (and their spouse, if applicable) to work or look for work.

See IRS Publication 503 for a full list of eligible expenses and what makes a dependent qualified. 

Eligible expenses

• After-school care, preschool, daycare, day camps, or babysitters for children under 13 during working hours 
• Care for an adult dependent who meets the criteria of a qualified dependent

Ineligible expenses

• A babysitter while the parent goes to dinner
• Overnight camps
• Tuition for schooling (kindergarten and above) 
• Lodging, meal fees, late fees, house cleaning services, or anything not directly related to care

Qualified dependents

Here are a couple examples of qualified dependents: 

• A child under the age of 13 and is the employee's taxable dependent
  • The child must live with you for more than half the year and meet other. requirements.
  • If you are divorced, IRS guidelines state that a child is a qualified dependent of the "custodial parent"
• A spouse or tax dependent who is physically or mentally incapable of self-care.

Check out the "Who Is A Qualifying Person?" section of IRS Publication 503 for more info.

FAQs

Can I pay a relative for care with my DCFSA? 

You can count work-related payments you make to relatives who are not your dependents, even if they live in your home. However, do not count any amounts you pay to:

• A person for whom you (or your spouse if filing jointly) can claim as a dependent
• Your child who was under age 19 at the end of the year, even if he or she isn't your dependent
• A person who was your spouse any time during the year
• The parent of your qualifying person if your qualifying person is your child and under age 13

Can my spouse call Gusto and manage the DCFSA account?

For account security, only the primary account holder can contact Gusto for support on pre-tax benefits queries.

Does my babysitter need to be licensed? 

You do not need to use a licensed babysitter. However, you cannot be reimbursed for the babysitting services of a tax-dependent or someone who is not 18 or older and the babysitting must be work-related.

Eligible employees choose how much they want to contribute during open enrollment. Their contribution is also known as their election. 

Pre-tax calendar year limits

View year-to-date contributions

If you want to know how much you've contributed to your DCFSA, check your paystub or the Benefits section of your Gusto account.

Change contributions

The annual amount you choose to contribute during your enrollment is locked in for the company’s policy year. Your total election amount is divided by the number of regular payrolls your company will run during the policy year and deducted evenly from your paychecks. DCFSA elections cannot be changed unless you experience a qualifying life event.

If you experience a qualifying life event and think you're eligible to change your DCFSA contribution, reach out to benefits@gusto.com. Include the qualifying life event you experienced, documentation of the event, and the new contribution amount you'd like.

Keep in mind that if you want to lower your contribution amount, it can only be lowered up to the amount that has already been used or contributed, whichever is larger.

Fund availability

DCFSAs are post-funded, meaning that you can only use funds once they've been deducted from payroll and deposited into your account on the check date. 

Payroll deductions

Employee contributions are deducted pre-tax from payroll. For paychecks with DCFSA deductions, your funds are available to use on the check date. 

If a deduction is missed, the remaining amount owed is redistributed over the remaining payrolls in the policy year. 

Company bank account debits

Click here to learn about funding requirements, associated bank debits, and how to reconcile those debits.

When an employee sets aside pre-tax money for a Dependent Care FSA, their gross taxable income is lowered. Since employers are taxed for FICA on the amount an employee earns, employer taxes are also reduced. 

Here are the company fees to offer a DCFSA with Gusto:

• Annual base fee: $200 
  • The base fee only applies once per year, even if you also offer an FSA, HSA, or commuter benefits through Gusto. Whether you offer just a DCFSA or all four account types, the base fee is $200 total.
• Per enrolling employee:
  • $4 per enrolling employee per month, with a $20 minimum
  • Exception: For any employees who also enroll in an FSA through Gusto, there's no additional cost. Ex: The monthly company cost for someone who enrolls in a DCFSA is $4. The cost for someone who enrolls in both a DCFSA and an FSA is $4.

An enrolling employee is someone with an active benefit in that month or someone in a runout period. 

To offer a DCFSA through Gusto, your company must have Gusto-brokered medical insurance or use the broker integration. If you already have benefits with Gusto, you can only add a DCFSA during your next renewal. 

To set up medical coverage and a DCFSA, check out this article. 

If you offer a DCFSA through a third party, you can set up pre-tax payroll deductions for enrolled employees. 

Follow these steps if your company offers a DCFSA you'd like to transfer to Gusto. You must offer medical benefits through Gusto or use the broker integration to offer a Gusto DCFSA. 

Before you begin, you'll need a list of currently enrolled employees, their balances, and year-to-date contributions. Reach out to your current DCFSA administrator if you need help finding this. 

1. Sign in to your Gusto admin account.
2. Go to the Benefits section. 
3. Scroll to "All Benefits" and choose Flexible Spending Account - Dependent Care.
4. Choose Yes, we currently offer this benefit.
5. Choose Continue.
6. Click Save.

Once you complete the steps in Gusto, we'll start setting up your benefit and reach out to you with next steps. 

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:

• All full-time employees are eligible.
• If your company offers medical insurance to part-time employees, they're eligible.

Who’s ineligible

Per the IRS, some individuals are not eligible to contribute to a DCFSA:

• Variable employees
• Seasonal employees
• Contractors
• Owners taking owner’s draws
• 2%+ shareholders of an S corporation

When you can enroll in a DCFSA

If your employer offers a Dependent Care Flexible Spending Account (DCFSA) and you're eligible, you can enroll through Gusto:

• As a new hire
• During open enrollment
• If you've experienced a qualifying life event

Enroll in a DCFSA

Follow these steps to enroll or waive this benefit:

1. Sign in to your Gusto employee account.
2. On your home page, click the sticky note that says Choose your benefits.
   • If you don't see this, you may not be eligible to enroll in a DCFSA at this time. If you've experienced a qualifying life event, check out this article to change your benefits outside open enrollment.
3. Click Get Started to begin the enrollment process.
4. Part 1: Who’s covered.
   • Any dependent you add at this step will be added as a claimant to the Benefits Card Hub, where you'll manage your DCFSA. While any dependent can be added in this step, keep in mind that you can only use DCFSA funds on eligible dependents.
5. Part 2: Choose Benefits. Next to "Dependent Care FSA," select Enroll or waive.
   • If you would like to enroll in the Dependent Care FSA, choose Enroll. If you would like to waive this benefit, choose Waive. 
   • If enrolling, next answer all applicable questions. Your answers determine the maximum you can contribute to the DCFSA.
     • If you contribute to another DCFSA outside of Gusto, you're responsible for making sure that you do not contribute more than the IRS limit in any given calendar year. 
   • Enter the amount you want to contribute to the Dependent Care FSA. If the plan year spans two calendar years (such as a plan that begins December 1st, 2024 and ends November 30th, 2025):
     • Choose an election amount for each calendar year, up to that calendar year's limit.
     • If you choose the maximum contribution for the second plan year: Keep in mind that if you plan to renew the DCFSA the following plan year, you would not be able to contribute to or use the DCFSA until the second part of the renewal plan year. 
   • Note: Unlike other benefits you may be offered, there is no step to enroll dependents. Instead, dependents are added as claimants in "Part 1: Who's covered." Any dependent added in that step is added to your Benefits Card Hub as a claimant. Once you're enrolled, you can add or remove dependents anytime in the Benefits Card Hub.
6. Part 3: Extra Information.
   • If applicable, answer any questions here then select Save & Continue.
7. Part 4: Sign forms.
   • If applicable, e-sign any forms here. Then select Confirm Enrollment to confirm your selections.

Your Gusto Benefits Card will arrive at your mailing address in a plain white envelope before the benefit begins. 

After the benefit's effective date, you can find your plan details in the Benefits section of your Gusto account. There you'll also find your plan document, which explains DCFSA rules and how to use your benefits. Payroll deductions will begin on the first payroll of the DCFSA's plan year.  

Click here for steps to access and use your Benefits Card Hub.

Click here to learn about managing your Gusto benefits card, including activating it, ordering a card for yourself or a dependent, and more.

You can review and manage your expenses in the Benefits Card Hub: Under "My Accounts," click DCFSA.

See the steps above on how to register or sign in to the Benefits Card Hub.

Add or edit a reimbursement method

You can choose to be reimbursed by check, direct deposit, Venmo, or PayPal. Follow these steps to set up or change your reimbursement method:

1. Access the Benefits Card Hub.
2. In the top-right corner, click on your initials.
3. Click Manage Account.
4. Click the Reimbursement Options tab.
5. Choose Add Payment Method.
6. Fill out the prompts and you’re ready to start getting reimbursed.

Note: Adding a bank account can take 2–3 business days to verify.

Receipt requirements

Make sure your receipt includes:

• Dependent name
• Name of the service provider
• Address of the service provider
• Social Security number or tax ID of the service provider
• Service date
  • Note: The phrase "service date" or "service dates" must be included. If your documentation does not include the service date, you can complete this form and upload it with your claim for review. A payment date, invoice date, or report date is not enough.
• Description of services received
• Cost of service

Submit an expense for reimbursement

If you paid out of pocket for an eligible expense, you may submit it for reimbursement as long as the service was rendered during your coverage period, and the final date to submit claims has not passed. 

To submit an expense for reimbursement:

1. Access the Benefits Card Hub.
2. Choose Reimburse Me.
3. Upload your receipt, bill, or explanation of benefits (EOB).
4. Review the information on the next page. If all looks correct, you can submit the request. If anything needs to be corrected, you can edit the field directly.
5. Choose your reimbursement method and submit the request.

If the information can be validated immediately, your claim will be approved on the spot. If additional review is required you will receive an email when the claim has been processed. This is typically 3-5 business days

When you'll be reimbursed

If your claim is approved, you’ll be reimbursed using the reimbursement method you selected above.

Here's how the reimbursement is sent, based on the reimbursement method you've chosen:

• Check: A check will be mailed to your home address in a plain envelope. If the check has not been cashed, you can update your reimbursement method to direct deposit, Venmo, or PayPal in the Benefits Card Hub.
• Direct deposit: Your chosen bank account will receive the ACH within 1–3 days. It will appear on your bank statement as “Gusto PayClaim.”
• Venmo/PayPal: Payment will be sent instantly from “Elevate” to your Venmo or PayPal account. You will pay a fee of $1 per transaction for this service. 

Submit an expense for reimbursement after leaving your company

If your benefit has a runout period, you may have extra time to submit claims for qualifying expenses incurred during your employment. You can confirm your last day to submit an expense in the Benefits Card Hub.

If you did not register for your Benefits Card Hub during your employment, contact Gusto for help.

Pay a bill directly

If you receive a bill for an eligible expense, you can pay it via check directly from your associated pre-tax benefit account.

If you've already paid the bill and want to be reimbursed, go to the header above titled "Submit an expense for reimbursement."

Here's how to pay a bill:

1. Access the Benefits Card Hub.
2. Choose Pay a bill.
3. Upload your receipt.
4. Review the information on the next page. If all looks correct, you can submit the request.

If all the required information can be identified in the receipt, your claim will be automatically approved and the payment will be made to the provider by check. If not, the claim will be manually reviewed within 3-5 business days. You will receive an email once the claim has been reviewed and processed.

Note: Checks expire after 180 days. You will receive an email if a check is about to expire. If the check was sent to your provider, contact them first about the payment. 

The IRS requires that we validate the eligibility of each DCFSA expense. If an expense requires additional information to complete this validation, we’ll email you. You’ll also see it as a notification on your Benefits Card Hub homepage.

Here's how to resolve an expense requiring action: 

1. Access the Benefits Card Hub.
2. Click on Expense Details.
3. Filter for the status “Needs help.”
4. Click the expense that needs help.
5. You’ll see a note that provides more detail on what is needed. If additional documentation is needed, you can upload the documentation right there.

We'll review your documentation and email you with an update within 3–5 business days.

Here's what your documentation should include:

• Dependent name
• Name of the service provider
• Address of the service provider
• Social Security number or tax ID of the service provider
• Service date
  • Note: The phrase "service date" or "service dates" must be included. If your documentation does not include the service date, you can complete this form and upload it with your claim for review. A payment date, invoice date, or report date is not enough.
• Description of services received
• Cost of service

If you used your Gusto Benefits Card on an ineligible expense, we’ll email you. To make sure you're using the account’s funds by IRS standards, you should resolve this expense before the account expires. 

To resolve an ineligible expense, you can either offset the balance with an eligible expense, or you can pay it back with a check.

Option 1: Offset the balance with an eligible expense

1. Pay for an eligible expense out-of-pocket and save the receipt.
2. Submit the expense for reimbursement in the Benefits Card Hub.
3. The claim will be reviewed within 3-5 business days and applied to the ineligible expense.
   • If the eligible expense you submitted is more than the balance you owed, you'll be reimbursed for the remainder. For example, if you owe $10 for an ineligible expense and submit an eligible $15 expense to offset it, your balance owed will be $0 and you'll be reimbursed $5 from your account.

Option 2: Pay the expense back via check

Mail a check for the amount of the transaction to:

• Elevate HCS
• PO Box 875050
• Kansas City, MO 64187-5050

You can submit a Dependent Care FSA expense for reimbursement that is over the balance that you have available. If approved, you'll only be reimbursed up to the amount you have in the account. Then you'll be reimbursed for the remaining balance over time, or until you reach your annual DCFSA contribution. 

Click here to learn about funding requirements, associated bank debits, how to reconcile those debits, and the reason behind "Replen invoice" emails.

If you are no longer interested in offering a DCFSA, you can either cancel the plan at your next benefits renewal or cancel the benefit mid-year.

The contribution amount you choose during your enrollment is locked in for the remainder of the company’s policy year. You can only change your DCFSA if you experience a valid qualifying life event, like a change in daycare needs.

Check out the chart below for life events that qualify you to make changes, and click here for steps to change your DCFSA in Gusto. 

Here are the contribution changes you can make:

• If you want to decrease your contribution, you can only lower it to the amount that you've already contributed.
• If you want to increase your contribution, you can only contribute up to the IRS maximum. 
• When you make your change in Gusto, enter the new total contribution you want to have made by the end of plan year.

Life events that qualify you to change your DCFSA

There are no tax forms required for DCFSA benefits.

If your plan year has ended or your company has canceled the Dependent Care FSA, you may still have access to your Dependent Care FSA funds via the runout period, grace period, or rollover. 

If your company is moving off of Gusto or has found a new broker, connect with your employer on whether your Dependent Care FSA will be moving as well. In either of these situations, you will not be able to submit expenses for reimbursement after the plan has ended.

Runout period

At the end of your company’s plan year, you have 90 days to submit claims for services rendered during your previous plan year. This is called the runout period.

Your reimbursement request(s) must be for services rendered during your eligible coverage period. If you have two accounts that are eligible for reimbursements, you will submit a reimbursement request separately. 

Grace period

In addition to the runout period, your plan may also have a grace period. This is extra time for you to use DCFSA funds on new expenses after the plan year ends. The grace period is typically 2 months and 15 days. Check the DCFSA tile in the Benefits section of your Gusto account to see if your plan has this and your last day to submit claims. 

Leftover funds

Once the runout period ends, 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.

A DCFSA is terminated on the last day of employment. Funds are "use it or lose it," meaning any leftover funds after the runout period are forfeited to the employer.

Runout period

You have until 90 days after your last day of employment to submit reimbursement requests for services rendered during the plan year. This is called a runout period, and you can find the last day you can submit a request in the Dependent Care FSA section of your Benefits Card Hub.

Leftover funds

90 days after your last day of employment, 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.