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
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Contribution Limits

Limited purpose FSA

2020 maximum contribution is $2,750

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

What expenses can I use my LPFSA to cover?

Below is a quick reference list of expenses that can be reimbursed from a Limited Purpose Flexible Spending Account. For more detailed information, please refer to IRS Publication 502 titled “Medical and Dental Expenses,” online at  irs.gov/pub/irs-pdf/p502.pdf. For tax advice, please consult a tax or legal professional.

  • Bridges
  • Crowns
  • Dentures
  • Dental Surgery
  • Orthodontia
  • Root Canals
  • Contact Lenses
  • Eye Exams
  • Eyeglasses
  • Eye Surgery
  • Prescription Sunglasses
  • Vision Correction Procedures
What are the 2019 LPFSA contribution limits?

The Internal Revenue Service (IRS) has established a 2018 maximum contribution of $2,700.

What is a Limited Purpose Flexible Spending Account?

A Limited Purpose Flexible Spending Account (LPFSA) is a type of benefit account that lets you use pre-tax dollars to pay for eligible expenses for you, your spouse, and your eligible dependents. It’s much like a typical Healthcare FSA; however, you may only use LPFSA funds to pay for qualifying dental and vision expenses.

Who is eligible to have both a HSA and LPFSA?

A LPFSA covers qualified expenses for dental and/or vision care provided to your, your spouse, or qualified dependents. Typical eligible expenses include: Dental Vision Cleanings Contact lenses Fillings Eyeglasses Crowns Eye exams Braces Vision correction procedures

When can an expense be reimbursed by more than one source?

Never. Expenses reimbursed under you LPFSA cannot be reimbursed under any other plan or program, including an HSA. Only eligible out of pocket expenses may be reimbursed. In addition, expenses reimbursed under an LPFSA may not be deducted when you file your tax return.

What time frame should expenses incur to be considered eligible?

LPFSAs, just like FSAs, have a start date and an end date, and the time in between is called the plan year. Expenses must be incurred during the LPFSA plan year. As noted in IRS guidelines, expenses are considered incurred on the date when the vision or dental care service was provided, not when you are formally billed or when you pay for the service.