CU CARES: Childcare Answers, Resources & Educational Services
Financial Information

1. What is a dependent care flexible spending account?
2. What expenses are eligible under the dependent care flexible spending account?
3. How much can I contribute to a dependent care flexible spending account?
4. What if my spouse also contributes to a dependent care spending account?
5. Who qualify as dependents?
6. How does the dependent care spending account work?
7. How do I get reimbursed once I have paid an eligible expense?
8. Once I enroll in the flexible spending account, can I make changes?
9. Will enrolling in the dependent care flexible spending account affect PERA retirement benefits?
10. What about dependent care tax credits?
11. How do I enroll?

1. What is a dependent care flexible spending account?
   A dependent care flexible spending account allows you to pay for dependent care expenses like childcare with before-tax dollars. Because it uses before-tax dollars, the flexible spending account works like a tax shelter of sorts. It reduces your taxable income, meaning you pay less in taxes for the year.



2. What expenses are eligible under the dependent care flexible spending account?
   The expenses must be work-related. In other words, they are expenses that enable you (and your spouse, if married) to work. Examples include childcare, elder care, before and after school care, pre-school, and other services that are needed to enable you to work.



3. How much can I contribute to a dependent care flexible spending account?
   As an eligible employee, you may contribute up to $5000 each calendar year to pay for the cost of caring for your eligible dependents. Contributions are made in equal monthly payroll deductions. If you are married, you may contribute up to the maximum amount only if your spouse also works, is a full-time student for at least five months of the calendar year, or is disabled.



4. What if my spouse also contributes to a dependent care spending account?
   If your spouse also participates in a dependent care spending account, the total amount of reimbursements to you and your spouse cannot exceed $5000. Also, if you are married but file separate federal income tax returns, your limit is $2500.
   
   
5. Who qualify as dependents?
   Dependent children under the age of 13 whom you claim on your federal tax return are qualified dependents. Also covered are incapacitated, older dependents whom you claim on your federal tax return, who reside in your home at least eight hours a day, and who cannot be left alone.



6. How does the dependent care spending account work?
   During open enrollment, you must decide how much to contribute for the upcoming year. It is very important that you figure your contribution carefully because any money left in your account at the end of the year must be forfeited. An easy method for determining your expenses is to add up the expenses from the previous year and use that figure to identify how much to set aside monthly. Then, beginning with your January pay, your monthly contribution will be deducted through regular payroll, before taxes and PERA are calculated.



7. How do I get reimbursed once I have paid an eligible expense?
   After you have paid an eligible expense, you will submit your receipt along with a flex reimbursement form to CompuSys, the company that administers the program. You can then choose to receive your reimbursement via direct deposit or via a check mailed to your home. Remember: You can only use your spending account to reimburse expenses made in the calendar year in which you enroll.



8. Once I enroll in the flexible spending account, can I make changes?
   No, once you make your spending account choices for a calendar year, you cannot change them until the next annual open enrollment unless you have a qualified change in your family status, e.g. marriage, divorce, death, birth or adoption of a child, or termination of employment (contact Payroll and Benefit Services for a detailed list of qualifying events). For this reason, careful planning of estimated expenses is important.



9. Will enrolling in the dependent care flexible spending account affect PERA retirement benefits?
   If you are a PERA participant, your PERA retirement annuity or disability retirement is based on the average of your three highest annual salary amounts. Since a flexible spending account reduces the salary on which PERA calculates benefits, your PERA retirement benefits may also be reduced. For this reason, persons within three to five years of retirement may not want to participate in a flexible spending account since these are typically the years in which salary is highest.



10. What about dependent care tax credits?
    Reimbursements from a dependent care spending account may reduce or eliminate dependent care tax credits on your federal income tax return. For most people, the spending account provides a greater benefit; however, everyone’s tax situation is different, so it is best to compare tax savings on an individual basis.



11. How do I enroll?
    You will find enrollment information in the CU-Flex Options section of your benefit packet. Remember, you can only enroll during open enrollment, or if you have a qualified change in your family status, such as marriage, divorce, death, birth or adoption of a child, or termination of employment (contact Payroll and Benefit Services for a detailed list of qualifying events). If you have additional questions about dependent care flexible spending accounts, please contact Payroll and Benefits Services at 303-735-6500 or visit their website at http://www.cu.edu/pbs/ .

• To download the Childcare Resource Guide as a PDF file, click here.