What Is a Limited Purpose FSA?

A dedicated account for vision and dental expenses

A limited purpose flexible savings account, or LPFSA, is available to employees who are enrolled in a high-deductible health plan as well as an HSA. Establishing an LPFSA can save you money on taxes by using your LPFSA dollars for your dental and vision expenses while preserving your HSA funds for other purposes, including saving those funds for the future.

  • Save an average of 30% on qualified dental and vision expenses by using pre-tax dollars
  • Maximize your tax savings by enrolling in both an HSA and LPFSA
  • Great for big ticket expenses like LASIK and braces
  • Your full election amount is available on Day 1 of the plan year — like an interest-free, tax-free loan
  • Like standard FSAs, LPFSA funds operate on a “use it or lose it” basis, so it’s important to plan accordingly

Contribution Limits

Limited purpose FSA

2024 maximum contribution is $3,200.

LPFSA tax benefits

Federal Tax Rate Annual FSA Contribution Annual Tax Savings
15% $1500 $340
15% $2700 $612
25% $1500 $490
25% $2700 $882
35% $1500 $610
35% $2700 $1152

For illustrative purposes only. Savings calculations are based on the Federal tax rate listed in the table and 7.65% FICA. Your tax situation may be different. Please consult your tax advisor.

Frequently Asked Questions

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Can I change my election amount mid-year?

Elections can only be altered if you experience a change in status as defined by IRS regulations, such as a marriage, divorce, birth, or death in your immediate family.

How soon can I start spending my LPFSA funds?

With an LPFSA, your entire annual election amount is available on the first day of the plan year even though you haven’t yet contributed that amount.

How do I get the funds out of my LPFSA?

If you have a benefits debit card, simply swipe it at the register. Otherwise, just file a claim online, be sure to include the receipt documenting the patient, provider, date and type of service, and cost. Once approved, your reimbursement will be direct deposited into your bank account.

How do I determine the date my LPFSA expenses were incurred?

Expenses are incurred at the time the dental or vision care was provided, not when you are invoiced or pay the bill.

Who is eligible under an LPFSA?

Most LPFSAs cover eligible expenses for you and all of your dependents, even if they’re not covered under your primary health plan. For more specific coverage details, please refer to your employer’s Section 125 document.

How do I contribute money to my LPFSA?

Your annual election will be divided by the number of pay periods in your plan year. This amount will be deducted from your paycheck before taxes are assessed.