Limited Purpose FSA (LPFSA)
An FSA that covers only dental and vision expenses, designed to work alongside an HSA.
What is Limited Purpose FSA (LPFSA)?
A Limited Purpose FSA (LPFSA) is a special type of Flexible Spending Account that only covers dental and vision expenses. It's designed specifically for people who have an HSA - since you normally can't have a regular FSA with an HSA, the LPFSA provides a workaround.
By using an LPFSA for dental and vision expenses, you can save your HSA funds for other medical expenses or for long-term investment growth. This strategy maximizes your tax savings by taking advantage of both accounts.
LPFSAs follow the same rules as regular FSAs: use-it-or-lose-it (with potential grace periods or limited carryover), employer-sponsored, and funded with pre-tax payroll deductions. The contribution limit is the same as a regular healthcare FSA.
Frequently Asked Questions
Why would I want an LPFSA if I have an HSA?
An LPFSA lets you pay for dental and vision expenses with pre-tax dollars while preserving your HSA for other expenses or long-term investment.
What can I use LPFSA funds for?
Dental and vision expenses only. This includes cleanings, fillings, glasses, contacts, LASIK, and similar expenses.
Related Terms
Flexible Spending Account (FSA)
An employer-sponsored account that lets you pay for eligible healthcare expenses with pre-tax dollars, typically with a use-it-or-lose-it rule.
Health Savings Account (HSA)
A tax-advantaged savings account for people with high-deductible health plans to pay for qualified medical expenses.
High-Deductible Health Plan (HDHP)
A health insurance plan with a higher deductible and lower premiums that qualifies you to open an HSA.
Related HSA Expenses
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