2026 Update
2026 Dependent Care FSA Plan Amendment Checklist
Last updated August 18, 2026
The One Big Beautiful Bill Act (OBBBA) permanently raised the Dependent Care FSA limit to $7,500 for 2026, up from $5,000 — the first increase since 1986. Unlike a cost-of-living adjustment your systems might auto-apply, this requires deliberate action on your plan document and administration before employees can actually use the higher limit.
The checklist
- Amend the Section 125 plan document. Update the DCAP component to reflect the new $7,500 annual limit ($3,750 for married filing separately) before employees can elect above the old $5,000 cap.
- Update payroll system caps. Confirm your payroll and benefits enrollment platform's DCAP election cap is raised to match — a stale system cap will silently block employees from electing the full new amount.
- Notify your TPA. Your third-party administrator's claims system needs the new limit reflected, along with any debit card election limits, before open enrollment opens.
- Update enrollment materials. Benefits guides, SPDs (summary plan descriptions), and enrollment platform copy referencing the old $5,000 figure need updating — this is an easy one to miss since it's often boilerplate text reused year to year.
- Communicate the change to employees. Most employees have no idea the limit changed. A short, specific callout in your open enrollment communications can meaningfully increase adoption and perceived benefits value.
- Re-run nondiscrimination testing assumptions. A higher limit can shift utilization patterns, particularly if HCEs are more likely to elect the new maximum than non-HCEs — factor this into your projected testing.
Timing
Aim to complete plan document amendments and system updates before your open enrollment window opens for the 2026 plan year. If your plan year doesn't align with the calendar year, confirm with your TPA or benefits counsel exactly when the new limit takes effect for your specific plan.
See also how to set up a Dependent Care FSA if you're evaluating offering one for the first time rather than amending an existing plan.