Servicemembers will have access to dependent care flexible spending accounts (DCFSA) for the first time during this year’s federal benefits open season, which runs Nov. 13 through Dec. 11. This benefit will provide military families with an additional financial option to reduce the burden of the cost of dependent care.

The move, announced in a March DoD memo entitled Strengthening Our Support to Service Members and Their Families, allows servicemembers to set aside up to $5,000 per household in pre-tax earnings for qualified dependent care expenses. Approximately 400,000 active component servicemembers and members of the Active Guard Reserve (AGR) on Title 10 orders have eligible dependents and may be eligible for this benefit, according to DoD. MOAA has advocated for the expansion of this benefit to include uniformed servicemembers as a way to ensure parity with their federal civilian counterparts, who have had access to DCFSAs for years.

Do I Need a DCFSA?

Like other benefit programs, there are several things to consider.

Servicemembers can enroll in the program through the Federal Flexible Spending Account Program (FSAFEDS); enrollment takes place yearly during open season. FSAFEDS provides detailed information for military members considering enrollment.

[MORE MOAA FINANCIAL RESOURCES: MOAA.org/Finance]

Families can contribute anywhere from $100 to $5,000 over the year to a DCFSA. The amount is deducted from pay before taxes, reducing the amount of total income subject to taxes. Examples of qualified expenses include child care, preschool, before- and after-school care, day camps (not overnight), and child or adult day care. Beginning in January 2024, servicemembers taking advantage of a DCFSA will submit substantiated claims for qualified expenses through FSAFEDS.

It’s important to note that not every military family with dependent care requirements will benefit from a DCFSA. Some families would see greater savings from using the Child and Dependent Care Tax Credit instead of a DCFSA. FSAFEDS offers an online dependent care tax credit worksheet to help beneficiaries determine what is best for their specific tax situation.

Servicemembers should estimate anticipated dependent care expenses for 2024 to determine the amount they need to set aside in these accounts because it’s a “use or lose” benefit. When working through this process, servicemembers should access DoD’s free counseling and advice from personal financial management counselors aboard many installations, as well as tax counselors available via Military OneSource.

[RELATED: Lawmakers Seek Parental Leave Parity for Guard and Reserve Members]

DoD’s Office of Financial Readiness (FINRED) has compiled a list of frequently asked questions specific to DCFSAs that help military families considering the benefit. MOAA will continue to work with DoD to ensure the successful implementation of this program, monitor usage rates, and find ways to improve financial stability for military families.