Q.- An employee’s spouse has a brain ailment and is incapable of self-care. She hires a caregiver to come to the house to take care of him, bathe him and feed him while she is at work. Should she elect to participate in the health FSA or dependent FSA for reimbursement of the home care expenses?
A.- Based on the information below, the employee would elect to participate in her employer's Dependent Care Flexible Spending Account Plan. This assumes:
(1) The employee and her spouse have the same principal place of abode for more than half of the year.
(2) The spouse spends at least 8 hours per day in the house.
(3) The spouse is mentally or physically incapable of self-care.
(4) The home care is needed for the employee to go to work.
(5) The employee is seeking reimbursement for expenses incurred only when she is at work (i.e., not for care on the weekends).
If these requirements are met, the costs for the care giver should be eligible for reimbursement, if proper documentation is provided.
The maximum amount an individual may elect to contribute to a dependent care FSA under tax laws is the smallest of the following: (a) $5,000 if the employee is married filing jointly; (b) the employee's earned income for the year; or (c) the spouse's earned income. A spouse who is not working because he is incapable of self care is considered to have earned income of $250 per month. This means that the employee's maximum dependent care FSA election would be $3,000.
Please also note that if the employee incurs separate medical treatment expenses from the home provider (such as wound care, pain management, medicine dosage), and if those expenses can be separately identified, the medical expenses may be eligible for reimbursement from a health flexible spending account plan.
