FSA Mistakes to Avoid: Spouse & Dependent Rules
If both you and your spouse have elected to participate in either Healthcare Flexible Spending Accounts (Healthcare FSAs) or Dependent Care Accounts (DCAs), there are specific rules for annual contribution limits and the use of funds.
Healthcare FSAs Are Individual Accounts
Healthcare FSAs can only be contributed to by an individual. There is not a family contribution option. Both you and your spouse can each have your own Healthcare FSA through your respective employers and both contribute the maximum amount to each account. For example, if you each contribute the maximum of $2,750* to your Healthcare FSAs, you will have a total of $5,500 for your family.
Healthcare FSA Funds Can Be Used for Spouses and Dependents
You can use funds from your Healthcare FSA to pay for eligible medical costs for both your spouse and tax dependents, regardless of the medical insurance in which they are enrolled. Be sure to keep track of which account is being used for documentation purposes. To use funds for your dependents, they must be claimed on your tax return and dependents cannot file their own return.
Dependent Care Accounts Are Household Accounts
Unlike a Healthcare FSA, Dependent Care Accounts (DCAs) offer a family contribution option, which means you only need one DCA to cover your household. For DCAs, the annual contribution limit is $2,500 per year if you file your tax return as married filing separately and $5,000 for joint tax returns.+ You and your spouse are allowed to have your own DCAs but your combined annual maximum cannot exceed $5,000.
A unique rule to note for Dependent Care Accounts (DCAs) is your maximum annual contribution cannot exceed the lesser of your or your spouse’s salary. In other words, if you are single, you cannot contribute more than you earn in a tax year. If you are married, you cannot contribute more than you or your spouse earns in a tax year. For example, if you earn $40,000 per tax year, and your spouse only earns $2,000 per tax year, your maximum DCA contribution cannot exceed $2,000.
For all reimbursement accounts, you may only file for a reimbursement once. For example, if you and your spouse each have a Healthcare FSA, you cannot each file a separate claim for the same expense.
If you have additional questions about Flexible Spending Accounts, visit our customer support section for FAQs and educational videos.
Related FSA Articles:
The Internal Revenue Code (IRC) allows participants to reduce their taxable income by participating in a Healthcare Flexible Spending Account (HCFSA).