U.S. Coast Guard (Finally) Gets DCFSA: How This Benefit Has Helped Military & Government Workers Since 2003 

 (Originally Published 19 Feb 2025, Updated 26 March 2025) 

“Blessed are the flexible, for they will not be bent out of shape.” — Robert Ludlum

As a U.S. Coast Guard (USCG) spouse, Army veteran, and financial advisor, I’m keenly aware of how important many employee benefits are to military families. So, you can imagine my excitement upon getting word that Dependent Care Flexible Spending Accounts (DCFSA) have finally been made available to USCG personnel.  

The high cost of daycare for children under age 13 — and older dependents who can’t look out for themselves — puts a strain on many families like mine.¹ In fact, a widespread lack of affordable, accessible care options contributes to many servicemembers forgoing a pension to leave the military before reaching retirement.²

To help address this issue, this article explains what a Dependent Care FSA is, how it works, how it’s changed over time, and how you make the most of yours.

Understanding FSAs 

A Flexible Spending Account (FSA) effectively subsidizes expenses in particular categories by allowing you to automatically contribute a portion of your paychecks – before taxes.³  

To sign up or learn more, visit www.fsafeds.com or contact your Human Resources office. 

New in 2025: Enrollment for USCG & NOAA Corps 

The federal government has been the nation’s largest employer since World War II. As of late 2024, it employed approximately 3 million civilian workers.⁸ 

Federal employees first gained access to FSAs in 2003, when President George W. Bush launched the FSAFEDS program.⁹ Active-duty military members, however, were excluded until the 2023 National Defense Authorization Act (NDAA) directed the Department of Defense to create an FSA program.¹⁰ 

Even then, the U.S. Coast Guard (approximately 40,000 members in uniform)¹¹ and the NOAA Commissioned Officer Corps (roughly 330 members)¹² have not been included—until now.¹³ Their first enrollment window began on March 3, 2025, and will remain open through March 31, 2025.¹⁴ 

Contribution Limits & Eligibility 

In 2025, the Dependent Care FSA (DCFSA) contribution limit is $5,000 per household—or $2,500 if you’re married filing separately.¹⁵ Both spouses must have earned income, unless one is either a full-time student or incapable of self-care. In those cases, the IRS allows you to count $250 per month (for households with one dependent member) or $500 per month (for those with two or more) as deemed income for the purposes of meeting the earned income requirement.¹⁵ 

For example, a Soldier with a disabled husband and a healthy daughter in kindergarten would be eligible to count $500, but a Sailor with a disabled wife and no other dependents could only count $250. 

Please note, DCFSA funds must be used by the end of the calendar year, but the federal plan gives you a grace period until March 15 of the following year to spend any remaining funds.¹⁷ 

Tip: FSAs are “use-it-or-lose-it,” so only set aside what you’re confident you’ll spend. 

To give some sense of the potential tax savings: 

• A single filer earning $60,000 or more and contributing the full $5,000 could save roughly $600 in taxes.¹⁶ 
• A dual-income household earning $150,000 could expect to save around $1,100. 

Please note, your DCFSA contributions will appear in Box 10 of your W-2 (labeled “Dependent Care Benefits”). 

Maximizing Your DCFSA Benefits 

A. Monitor Your Balance

Keep tabs on your account to ensure you use all the funds before the deadline. Unused funds are forfeited after the grace period. 

B. Prepare for Relocation

If you PCS or deploy, update your care plan and adjust contributions if necessary. Sudden moves can disrupt care arrangements, so flexibility and foresight are key. 

C. Plan for Seasonal Costs

DCFSA funds can be used for seasonal day camps and regular after-school programs—as long as the primary purpose is care and supervision (not education or recreation alone). 

Examples include:

• • Spring break science camp at a local museum
  • After-school karate or gymnastics programs

Note: Overnight camps and academic enrichment programs primarily focused on instruction generally do not qualify.¹⁸ 

D. Use DCFSA for Adult Care

Funds can also be used for adult day care—such as for a disabled teen or elderly parent—if the care enables you or your spouse to work. Eligible options include licensed adult day health programs, in-home attendants, or care for a dependent over age 13 who cannot look after him or herself.¹⁹ 

E. Look for Reimbursement Opportunities

Some on-base or in-home childcare may qualify for reimbursement. Only expenses you personally pay for are eligible—subsidized or already-reimbursed costs typically don’t qualify (i.e., no “double dipping”). 

F. Coordinate With the Child and Dependent Care Tax Credit

You can’t claim the same expenses under both a DCFSA and the tax credit (again, no “double dipping”). However, if your care costs exceed your DCFSA contribution, you may be able to apply the remainder to the credit. Consult a tax pro like a CPA or EA to determine the best strategy for your household.²⁰ 

G. Submit Claims Early

Avoid delays by submitting your reimbursement requests early. Waiting until the deadline can cause processing bottlenecks or result in denied claims if documentation is missing. 

Final Thoughts & Action Steps

“Knowledge is of no value unless you put it into practice.” — Anton Chekhov 

With some planning, a DCFSA can help you save hundreds each year on essential care expenses. Just remember to track spending, file claims on time, and plan ahead. 

And spread the word—many military families (Coast Guard or otherwise) don’t yet realize this benefit is available to them. 

And if you need assistance, consider working with a fee-only Certified Financial Planner™ (CFP®)—especially one familiar with military life. Whether you’re dealing with VA disability, Social Security, investments, estate planning, or insurance, having the right advisor can help you stay on course.