Which type of FSA should I choose?
Health Care and Child & Elderly Care FSAs both provide you with the same tax advantages, but they follow different rules for what they'll pay for, when you can use them, and which additional requirements (if any) you'll need to satisfy in order to use them. Here's how to choose the FSA type that's right for you.
Should I set up a Health Care or Child & Elderly Care FSA?
The right choice depends on what kinds of expenses you have:
- Choose a Health Care FSA to pay for out-of-pocket health care expenses (e.g., doctor copays, prescriptions, deductible expenses, and other FSA eligible expenses) for you, your spouse, or your dependents.
- Choose a Child & Elderly Care FSA to pay for the care of a child or other dependent (e.g., an aging parent) so that you (and your spouse, if you have one) can work or look for work.
Can I have both types of accounts?
Sure! If you have both health care and child/elder care expenses, you can contribute to both a Health Care and Child & Elderly FSA. During setup, you'll be able to choose separate amounts for each type. However, you can't transfer funds between the two accounts.
Are there special requirements for using a Child & Elderly Care FSA?
To use the funds from a Child & Elderly Care FSA, you need to be working or currently looking for work, and you likely need to claim your dependent(s) on your federal tax return.
- If your dependent is a child, they must be 13 years or younger.
- If your dependent is over 13 years old, they must be physically or mentally unable to care for themselves, and have lived with you for more than half the year.
See the IRS rules for determining whether a person qualifies as a eligible dependent for the purposes of a Child & Elderly Care FSA.
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