McHenry Introduces the Family Care Savings Act
Bipartisan bill would increase savings cap for dependent care FSAs
Today, Chief Deputy Whip Patrick McHenry (R, NC-10) introduced H.R. 782, the Family Care Savings Act. This legislation raises the cap on dependent care flexible spending accounts from $5,000 to $10,000 and indexes the cap amount to inflation. Joining as an original cosponsor of the legislation is Congresswoman Grace Meng (D, NY-06).
"In recent years, we've seen the cost of everyday goods and services rise dramatically and yet the vast majority of American families have seen their wages stagnate," said Congressman McHenry. "These new budget realities have posed unique challenges which the Family Care Savings Act aims to address. By increasing the cap on dependent care flexible spending accounts, this bipartisan legislation can help ease the financial burden on families saving for vital child and dependent care services.”
The dependent care FSA was originally created as part of the Tax Reform Act of 1986 and is designed to help American families plan and budget by using pretax dollars to pay for expenses related to the care of children, disabled spouses, or elderly parents. The current cap of $5,000 was originally set in 1986 and applies to children under the age of 13, anyone who is physically or mentally unable to care for themselves, and any adult whose care is predominantly paid for by another person. Minimum and maximum contribution amounts to dependent care FSAs are set by employers.
Flexible spending accounts (FSA) are a savings vehicle established as part of employer-sponsored health insurance plans. They allow employees to save a share of their earnings for qualifying expenses which typically include medical or dependent care. The money is pre-taxed and deducted directly from employee's paychecks.