What happens to your DCA when you leave your job?
When you leave a job, there’s a lot to think about. If you’re using a Dependent Care Account (DCA), you may have questions about what happens with your DCA funds when you leave your job.
Typically, when you leave your employer, your Flexible Spending Accounts (this includes DCAs, Healthcare Flexible Spending Accounts (HCFSA) and Limited Purpose Flexible Spending Accounts (LPFSA)) are terminated on your last day of work. Depending on your specific plan, which is tied to your employer, you may be able to submit claims through the end of the plan year and runoff period, just like when you were an active employee. The dates of services/expenses will need to be before your last day of work to be eligible for reimbursement.
Let’s say your employer’s plan year is January through December and your last day of work is January 31, 2021. Any childcare expenses that occurred prior to January 31 are eligible for reimbursement. If your plan’s runoff period is 90 days, that means you will have 90 days after December 31, 2021 to submit claims for any care that took place in January 2021. After that time, the funds will be forfeited.
Exceptions Made Due to COVID-19
Previously, any dependent care/expenses that occurred after your last day of work would not be eligible for reimbursement; however, you now may be able to still access those funds. Because of site closures and lack of access to childcare due to the COVID-19 pandemic, you may have been unable to use your DCA funds before leaving your employer. You could be wondering what happens to those funds that are in your account but can’t be used for reimbursement anymore.
Due to the Consolidated Appropriates Act of 2021, an extension of relief provided through the CARES Act and other administrative guidance published during 2020 in reaction to COVID-19, your employer can elect to allow you to use funds you were unable to use. If your employer doesn’t provide this option, then the funds in your account will be forfeited as usual.
Additionally, if your dependent turned 14 during 2020 when the pandemic prevented the use of DCA funds, your eligibility could also be extended—helping you use more of your contributed funds.
If you also have an HCFSA, you may find more information about what happens to those accounts in our blog post, “What to Do With Your HCFSA When Your Job Changes.”
This blog is up to date as of January 2021 and has not been updated for changes in the law, administration or current event.
