Understanding Limited Purpose FSAs
What is an LPFSA?
Limited Purpose Flexible Spending Accounts (LPFSAs) can help save you money and cover eligible dental and vision expenses. So if you find yourself looking up “cheap glasses online” or even just “dentists near me” you may want to keep reading. Like all Flexible Spending Accounts (FSAs), the funds are set aside from your paycheck pre-tax to cover eligible purchases. You and your employer may contribute to the account.
What you need to know:
- Full election amount is available the first day of the plan year
- Election changes (or adjusting contribution amount) require a qualifying event (based on employer’s plan design)
- “Use or lose” applies Account ends if you change jobs or retire, unless you are eligible for COBRA
- Can be paired with a Health Savings Account (HSA)
- May have a runoff period and a carryover or grace period
What are some LPFSA eligible expenses?
- Prescription glasses
- Contact lenses
- Contact lens solution
- Lasik Vision exams
- Dental cleanings and fillings
- Braces or invisible braces
- Dental aligners
- Toothache and teething pain relievers
Pairing an LPFSA
An LPFSA can be paired with a Health Savings Account (HSA), allowing you to increase your medical expense contributions throughout the year. An HSA can be used for purchases like over-the-counter medicines, menstrual care products, pain relievers and more. At the end of the plan year, leftover HSA funds can rollover. You may choose to invest your HSA funds after you have reached a certain balance, increasing your investment diversity. Even if you change employers, an HSA will stay with you so that you can grow savings long-term. By pairing an LPFSA with an HSA, you’re able to save more of your dollars on a pretax basis and potentially spend less of your HSA funds, allowing you to build up that savings account for the future.
Helpful HSA Articles:
- Five HSA Facts You May Not Know
- Using Your HSA as a Long-Term Savings Vehicle
- HSAs: Who can participate and make contributions?
This blog is up to date as of April 2023 and has not been updated for changes in the law, administration or current events.
FSA Store
Shop for Eligible Items on the FSA Store
You may purchase FSA-eligible items online at the FSA Store. Browse medical supplies, over-the-counter medication, prescriptions, and more.
Purchases may result in a small commission to American Fidelity at no additional cost to you.
