Q.- We have an employee who is paying for the full year of daycare up front. He wants to be reimbursed from his Dependent Care FSA for the full amount. Do we have to allow this?
A.- No. Dependent care expenses may not be reimbursed before the expenses are incurred. Dependent care expenses are incurred when the care is provided and not when the employee is formally billed, charged for or pays for the dependent care. In addition, it is likely that your dependent care FSA is structured to allow reimbursement only up to the amount actually contributed to the plan. If this is the case, the participant may not have the requested amount contributed to his account anyway.