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Maximizing Your Dependent Care Account During Open Enrollment

August 05, 2025

3 minute read

Category: Reimbursement Accounts

Two people smiling sitting on a couch.

With fall approaching, it's time to start thinking about pumpkins, cooler weather, and open enrollment for your benefits. One benefit that often gets overlooked is the Dependent Care Account (DCA). It's a great resource that may help you save money while taking care of your loved ones.

So, what is a DCA? It's a flexible spending account where your contributions are deducted from your salary before taxes are applied. This could potentially reduce your taxable income and increase your take-home pay. The funds may be used to pay for certain care expenses for your dependents while you work. Dependents may include children under age 13 or an adult living in your home who requires assistance.

Open enrollment provides an ideal opportunity to think about how much money you want to contribute to your DCA for the upcoming year. Here are some tips to help ensure you’re getting the most out of it:

 

  • Tip 1: Think about what care your dependents will need. This could be before or after school programs, summer or school break day camps, or perhaps adult day care. Remember, the main idea is that these services allow you to work or look for work. See a more extensive list ►

 

  • Tip 2: Find out how much these services will cost. Since there's an annual limit on DCA contributions, you’ll need to compare the cost of the care you need with these limits.

 

  • Tip 3: A DCA operates on a use or lose basis. Any money left in your DCA at the end of the year will be forfeited. Therefore, it's important to be as accurate as you can when deciding how much to contribute.

 

  • Tip 4: Not all expenses are covered. For instance, costs like tuition for kindergarten or higher grades, overnight camps, or care provided by a spouse or family member living in your home are excluded.

 

  • Tip 5: If you have a major life event like having a baby, getting married, or losing your job, you can make corresponding changes to your DCA contributions. This typically needs to be done within 30 days of the event.

 

  • Tip 6: Understand the specifics of your employer’s DCA plan, including enrollment and change deadlines, options for changing contributions mid-year, and whether they offer a grace period or carryover option.

Open enrollment is a great time to plan ahead and make the most of your benefits. With a little bit of thought and research, you can maximize your DCA and keep more of your hard-earned money in your pocket. Everyone's situation is unique, so it's essential to do your research and consider consulting with a financial advisor or tax professional to ensure a DCA is the right choice for you.

This blog is up to date as of April 2025 and has not been updated for changes in the law, administration or current events.

  • Tags:
  • DCA

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This information is intended to be educational. It is general in nature and should not be considered financial, legal or tax advice. Consult an attorney or a tax professional regarding your specific situation.

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