Publication Date



Social Policy Institute at Washington University in St. Louis


Dependent Care Flexible Spending Accounts (DCFSAs) can help workers save money on child care expenses by using pre-tax dollars, but few employees actually use the accounts, particularly low- to moderate-income (LMI) employees, because:

• DCFSAs are difficult to understand; figuring out if they are possible to use and worth the trouble is a complex task for families.

• Families face a “double-hit” if they use the accounts – they have to set aside pre-tax dollars for child care expenses and then pay out-of-pocket before getting reimbursed.

• Using a DCFSA may require certainty about a year’s worth of child care costs, with a possible penalty for over-estimating expenses (depending on each employers’ plan rules).

• DCFSAs can interact with tax credits, Medicaid, and federal/state poverty alleviation programs.

Document Type

Policy Highlights

Original Citation

Fox-Dichter, S., Frank-Miller, E., & Wolter, S. (2019). Making dependent care FSAs work for low- to moderate-income families: 5 action steps for employers [Policy Highlight No. 19-02]. St. Louis, MO: Social Policy Institute.


Permanent URL:



Workforce Financial Stability Initiative (WFSI)