BTDT moms- Flexible Spending Account Dependent Care question...

mouse10031978 · May 2013

We are considering setting money aside in an FSA for child care next year. We plan to use a small, in-home daycare provider. From what I have read online, it seems like we have a "debit-type card" to pay for daycare services? Does anyone know how this works? I wonder how we pay or how we get reimbursed for daycare expenses? Thank you for any guidance...

Manda-Kay · May 2013

I use a daycare center. I have a form I have to fill out with the dates DS was there and I attach the monthly statement daycare gives me that shows how much I paid. I never got a card, although I'm pretty sure I was supposed to. Instead, I get a check mailed to me with the amount that was taken out of my paycheck.

Pips09 · May 2013

A dependent care FSA is a reimbursement account. I've never heard of a debit card system for DCFSA; you may have been looking at a medical FSA, which does have the debit card system.

You pay for the expenses out of pocket, and then you get reimbursed by submitting a receipt or a form signed by your provider. The exact process will depend on your company's vendor. My company reimburses through the payroll system, but not all do, some issue separate checks or do a direct deposit.

*sparky* · May 2013

Pips09:
A dependent care FSA is a reimbursement account. I've never heard of a debit card system for DCFSA; you may have been looking at a medical FSA, which does have the debit card system.nbsp;You pay for the expenses out of pocket, and then you get reimbursed by submitting a receipt or a form signed by your provider. nbsp;The exact process will depend on your company's vendor. My company reimburses through the payroll system, but not all do, some issue separate checks or do a direct deposit.

This. I have only seen a debit card for Health FSA.

StayingSecret · May 2013

Manda-Kay:
I use a daycare center. I have a form I have to fill out with the dates DS was there and I attach the monthly statement daycare gives me that shows how much I paid. I never got a card, although I'm pretty sure I was supposed to. Instead, I get a check mailed to me with the amount that was taken out of my paycheck.

This, except they direct deposit money into our checking account when I submit the form. I submit the form once a quarter.

I don't use a daycare center, but a family member. Same thing. I fill it out. She signs it. I scan it in. I upload it to the website. They deposit money.

emu0013 · May 2013

*sparky*:
Pips09:
A dependent care FSA is a reimbursement account. I've never heard of a debit card system for DCFSA; you may have been looking at a medical FSA, which does have the debit card system.nbsp;You pay for the expenses out of pocket, and then you get reimbursed by submitting a receipt or a form signed by your provider. nbsp;The exact process will depend on your company's vendor. My company reimburses through the payroll system, but not all do, some issue separate checks or do a direct deposit.
This. I have only seen a debit card for Health FSA.

Yup, we get a check in the mail after submitting for reimbursement.

jefk · May 2013

We're considering this too. Do you find that getting the money pre-tax is better than getting the tax write-off for childcare expenses? That's where we're hung up right now.

Lena122 · May 2013

jefk:
We're considering this too. nbsp;Do you find that getting the money pretax is better than getting the tax writeoff for childcare expenses? nbsp;That's where we're hung up right now.

I honestly don't know the difference it makes before or after taxes but one reason I love it is that it takes money right out if H's paycheck and "banks" it until you make a claim. It's almost like I forget it's there until the claim goes through and they direct deposit it into my account. I realize this might not be beneficial to people on a very tight budget but its a nice way for us to put money aside for daycare without actually seeing it go from our paycheck.

ejs1of3 · May 2013

Make sure you know how it works before you sign up. We did this and the money was put on a card. This card could only be used at a daycare that had the system that work with the card. Ours did not and we couldnt get the money off the card. It was a nightmare trying to get our money back. Not all of them work like that but i would check it out first

groovygrl · May 2013

ours doesnt use a card. we just submit it at the end of the year for the full amount instead of monthly or quarterly, it is just easier for us that way. They send a check or do a direct deposit I believe.

jefk · May 2013

ejs1of3:
Make sure you know how it works before you sign up. We did this and the money was put on a card. This card could only be used at a daycare that had the system that work with the card. Ours did not and we couldnt get the money off the card. It was a nightmare trying to get our money back. Not all of them work like that but i would check it out first

Not sure about DH's work, but the one offered through my work is like this - you get a debit card and can use that for dependent daycare. One of my concerns is that the money is "use it or lose it," so if our daycare situation changes or the daycare doesn't accept the card, we'd be screwed. I think we're going to take the tax credit for this year and consider the card for next year.

LoCarb · May 2013

My DCFSA uses a debit card and my DC does not allow it. Therefore, I ask for an itemized receipt of my payments from DC quarterly and send it into the account service. They cut me a check for reimbursement.

MoreThanABride · May 2013

I have a card, but I don't use it, I just submit a claim and get reimbursed.

I think for most people it is better to take it pre tax because the after tax amount is reduced based on how much money you make. When DD1 was first born I didn't max out the pretax amount and could only claim about 20 percent of the amount after tax.

financialdiva · May 2013

We get a debit card, but I never use it b/c daycare doesn't take it. So I pay by check, get a receipt from daycare and submit a claim online. It is then directly deposited into my bank account. I submit claims every few weeks and even if I don't have enough deposited in my FSA account, I submit a larger expense amount and so as soon as it's taken out of my check, it's reimbursed.

Most people benefit from the FSA tax deduction. It reduces your paycheck, therefore reducing your income, which reduces both your income tax expense and payroll tax expense.

Sunidaze · May 2013

Ours does provide a debit card, although I've never activated mine nor even taken it out of the envelope. I pay beginning of each week and at the end of each month, I ask the center for a statement which I then submit online (obviously only for the amount currently in my account) to the company that administers our FSA and it is direct-deposited within a couple of days to my savings account. When I first starting using a dependent care FSA, it was a huge pain in the butt, but the company we use has really improved their ways, simplified the process greatly and makes it so easy.

Sunidaze · May 2013

jefk:

ejs1of3:
Make sure you know how it works before you sign up. We did this and the money was put on a card. This card could only be used at a daycare that had the system that work with the card. Ours did not and we couldnt get the money off the card. It was a nightmare trying to get our money back. Not all of them work like that but i would check it out first

Not sure about DH's work, but the one offered through my work is like this - you get a debit card and can use that for dependent daycare. One of my concerns is that the money is "use it or lose it," so if our daycare situation changes or the daycare doesn't accept the card, we'd be screwed. I think we're going to take the tax credit for this year and consider the card for next year.

If your daycare does not accept the card, there really should be no issue in getting monthly statements (or however frequently you want) from them and submitting them for reimbursement the old fashioned way. I can't imagine the company administering the plan would not allow this given that many people use in home providers or whatever that wouldn't have any need for a card reader.

FemShep · May 2013

Keep in mind that when you submit your reimbursement, you must provide a tax ID for the daycare provider (either an EIN for a business or the baby sitter's SSN). I am sure that your DCP is paying taxes on her small, in-home business, reporting everything properly, and there won't be an issue.....but you may want to check with her about whether she will be comfortable with the reimbursement process this just in case.

cedenton · May 2013

My center doesn't take cards so every two weeks around payday I submit the receipts for reimbursement.

Unlike the healthcare FSA, the full amount ($5,000K/year max) is not available from the beginning. You can only access what's actually been pulled from your paycheck ($208/paycheck if you get paid twice/month and are maxing out).

cedenton · May 2013

FemShep:
Keep in mind that when you submit your reimbursement, you must provide a tax ID for the daycare provider (either an EIN for a business or the baby sitter's SSN). I am sure that your DCP is paying taxes on her small, in-home business, reporting everything properly, and there won't be an issue.....but you may want to check with her about whether she will be comfortable with the reimbursement process this just in case.

I haven't needed this for reimbursement, but I think it's necessary come tax time.

singingirl96 · May 2013

yes, all of the above....

do keep in mind that if you are on a very tight budget, you'll have some delay getting reimbursed, which can be a problem. Since you have to pay out of pocket and it takes a while to get reimbursed, the first month is the hardest because you're paying daycare from a already reduced paycheck since they have already deducted the daycare money, which you won't see until you make a claim.

After that first hump, as long as you stay on top you making your claims, you should get your reimbursement checks on a schedule. Setting up direct deposit is even better since it goes straight into your account.

One thing that I do that makes my life easier, is that I have set up my direct deposit to deposit the daycare money directly into my DCP bank account. So, since I pay $250/wk, I have $500 directly deposited into her account, and the rest into mine. This is good for me because I don't have to worry about writing her a check. I don't even see the money since it goes straight to her.

Then the reimbursement goes back into my account too... so it all works out in the end.

FemShep · May 2013

cedenton:
My center doesn't take cards so every two weeks around payday I submit the receipts for reimbursement.
Unlike the healthcare FSA, the full amount ($5,000K/year max) is not available from the beginning. You can only access what's actually been pulled from your paycheck ($208/paycheck if you get paid twice/month and are maxing out).

You can also only get reimbursed for services that have already been provided. We used a DCA for DD's camp, and could only submit for reimbursement at the completion of the camp session.

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