Has anyone set up an FSA for dependent care?


Does anyone offer a Flexible Spending Account for dependent care to their employees as a benefit? If so, whom do you use as an administrator and what are the costs of administration?

Employees Benefits

asked Jan 19 '10 at 17:40
Oleg Barshay
2,091 points

1 Answer


I haven't set up and FSA before, but I used to work at a company that provided medical FSAs so I have a pretty good understanding of what the cost should be. For most good administrators, you'll pay some sort of one-time up front fee for plan documents and employee education (probably between $200-$1,000) and then a small monthly fee per employee (maybe $2-$15/month/employee).

The main thing you should look for is who holds the money before it's paid out to the employees. Because FSAs are "use it or lose it" plans, some employees will elect to withhold more money than they actually spend on dependent care. At the end of the year, this money either goes to your business (if you hold the money) or the FSA administrator (if they hold the money). You can save tons of money by finding a TPA that lets you keep the money, and it's generally worth paying higher admin fees for that if necessary.

Disclaimer: that's all based on my knowledge from medical FSAs so it's possible that dependent care FSAs don't have as many options since it's a smaller market.

answered Jan 23 '10 at 11:49
86 points
  • Thank you, Tyler. I was not aware that it is an option for the business to keep the unused money... if true, that is a game-changer! – Oleg Barshay 14 years ago

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