Current service members and their families can now enroll in the Uniformed Dependent Care Flexible Spending Account program – giving military families some financial relief on child and dependent care costs.
With the military spouse unemployment rate hovering around 21% for nearly a decade, this change could help move the needle on that number.
“It’s crucial to do what we can to reduce the cost of childcare which is heavily linked to spouse employment,” said Jennifer Goodale, Director, Military Family & Survivor Policy for the Military Officers Association of American, or MOAA.
MOAA, which represents more than 5 million members of the uniformed services community, and other military family organizations years ago joined forces to urge the Department of Defense to provide servicemembers with access to dependent care FSAs, Goodale said.
These groups even worked with Congress to introduce legislation that would require DoD to make this move. Fortunately, the department acted without needing the push from lawmakers which was another strategy we advocated for as DoD civilian employees already enjoyed access to FSAs. This was a solid move toward parity between servicemembers and their federal civilian counterparts.
Wick said service members in the National Guard performing Active Guard Reserve (AGR) duty are now eligible for DCFSA. Previously, only Service members in the active component and AGRs on Title 10 orders were eligible for a DCFSA. Now service members in the active component and all service members performing AGR duty are eligible.
“The Dependent Care Flexible Spending Account (DCFSA) is one of several initiatives directed by the Secretary of Defense to provide greater access to affordable, reliable, and high-quality dependent care as it is a crucial component of financial and overall military readiness for Service members and military families,” said Wick. “This year is the second year that Service members can enroll in a DCFSA. The program is administered by the Federal Flexible Spending Account Program (FSAFEDS), which manages Flexible Spending Accounts on behalf of federal government employees.”
According to Wick, a DCFSA can be used for child and adult care for dependents who are under the age of 13, or mentally or physically incapable of self-care. Typical DCFSA expenses include:
1. Day care
2. Preschool
3. Child Development Center fees
4. Summer day care
5. Elder care.
Service members can look up whether a specific expense they pay each year is DCFSA-eligible at FSAFEDS.gov.
“Service members who use a DCFSA can save on taxes while paying for these dependent care costs since using a DCFSA can lower their tax liability, or how much of their total earnings is subject to taxation,” Wick said.
In a 2002 study by RAND, DCFSA may not be advantageous to a servicemember because of overlap and federal tax code issues, but Goodale said the Office of Financial Readiness provides numerous resources through Military One Source to include financial counseling related to the use of flexible spending accounts and servicemembers and their families should take advantage.
“When disparities exist between employee benefits for servicemembers and the federal/private sector workforce, it’s vital to recognize the potential negative impacts those disparities will have on retention and recruitment,” she said. “Access to DCFSAs won’t make or break the retention and recruitment goals; however, it helps make the grass a little greener on the service side of the fence.”
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