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With open season for federal benefits now underway, service members can for the first time take advantage of the Dependent Care Flexible Spending Account, or DCFSA.
Federal benefits open season runs Nov. 13 though Dec. 11, and eligible service members and civilians who want to sign up for a DCFSA can do so at www.fsafeds.com.
Signing up enables participants to have money from their paychecks diverted to an account that can be used to pay for dependent care services, such as preschool, summer day camp, before- or after-school programs, and child or adult daycare.
Active-component service members along with Active Guard Reserve members on Title 10 orders are eligible to participate.
Eligible service members can contribute as much as $5,000 a year from their paychecks, via allotment, to the account. That money comes out pretax, which means that a military family that typically reports $30,000 a year in taxable income, for instance, would instead be able to report $25,000 in taxable income if they took full advantage of the benefit. That means they will pay less in taxes each year, yielding greater take-home pay.
The DOD is on track to implement DCFSA for eligible service members beginning January 1, 2024. Those who would like to participate can sign up during the annual Federal Benefits Open Season, which runs from mid-November to mid-December.
Jennifer Walker, the executive director for the Dependent Care Flexible Spending Account initiative, said as many as 400,000 service members have eligible dependents and will be eligible to take advantage of the benefits provided by the DCFSA program.
"That includes families who have children who are under the age of 13 or who have a spouse or other tax dependent, regardless of age, who is mentally or physically incapable of self-care," she said.
The program is part of a larger DOD effort to take better care of military service members and their families. In March, the department released the "Strengthening Our Support to Service Members and Their Families" memorandum, which, among other important initiatives, discussed making DCFSAs available to service members.
That memorandum was signed by Secretary of Defense Lloyd J. Austin III, who said taking care of service members and their families through efforts such as DCFSA is a top priority for the department.
"In recent years, our military community has weathered a number of challenges, but our people have risen to every mission and done it all with extraordinary resilience," Austin wrote in the March 2023 memorandum.
"But it is the department's ongoing moral duty to spare our outstanding people stress and struggle on the home front where we can and to show our service members and civilian employees how much they mean to us with tangible support that makes a genuine difference in their lives," he wrote "The department has, therefore, relentlessly focused on improving quality of life, and I am very proud of what we've achieved so far."
The DCFSA, like other pretax flexible savings accounts, is a "use or lose" benefit.
According to the DOD's Office of Financial Readiness, the DCFSA plan year mirrors the tax year, Jan. 1 through Dec. 31. After the plan year ends on Dec. 31, enrollees in a DCFSA have until March 15 of the following year to incur eligible expenses. Claims for expenses incurred must be submitted by April 30, the deadline for submitting claims from the previous plan year. Any funds remaining in the account after April 30 of the following year are forfeited.
Military personnel interested in taking advantage of the DCFSA are advised to first talk with a personal financial counselor or tax professional before signing up to participate in the program.
SOURCE DoD News Release