DCRA stands for Dependent Care Reimbursement Account and it is one of many so-called flexible spending accounts that can be availed by American employees. Through the DCRA, automatic deductions may be allowed on every payroll to fund one’s DCRA. Whenever a dependent needs some medical care for example, the employee with DCRA may use the same account to help him/her with medical expenses. An employee’s DCRA will grow bigger for every voluntary payroll deduction and he/she will be eligible to reimburse the total savings for this particular account whenever needed by an enrolled dependent. The best thing about flexible spending arrangements like DCRA is that they are classified as tax-advantaged benefits.
For DCRA, dependents that can be enrolled in the system are the employee’s kids up to 12 years of age, spouses who literally are dependent and need physical or mental care, and any other person who can also be classified as unable to tend for his/herself mentally and physically. Grandparents who need special medical care may also be enrolled as one’s qualified dependents who can avail of the benefits under DCRA. The only basic restriction under DCRA is that child or elderly care covers only day-care services and not long-term care such as those provided by elderly or nursing homes and similar facilities.
Day care services for children, adults, and the elderly are covered under DCRA. The expenses incurred for care provided to dependents at the employee’s own home or at another person’s home may also be reimbursed through the DCRA plan. As for children, even before-and-after school activities may also be reimbursed by an employee through DCRA. In the case of non-covered expenses, other than long-term care services, the spending involved in sleep-over children activities in school are also not part of the DCRA plan. Other miscellaneous expenses like transportation and activity fees are also not covered.