Visits to dental hygienist, optometrist, and orthodontist all count as qualified visits. For example, a visit to the dentist is considered preventative care, but teeth whitening is not. Qualified vision and dental expenses are those used for preventative care. Source: IRS What are qualified vision and dental expenses? Limited-purpose flexible savings account (LPFSA)Įligible dental, vision, and some post-deductible expensesĮligible dental, vision, and healthcare expenses Must have a high deductible health plan (HDHP)?Ĭan be used with a health savings account (HSA) The table below summarizes the differences between a LPFSA and an FSA. However, if you contribute too much to these accounts, you could lose all your funds at the end of the year. This would result in a $6,500 tax deduction if both accounts are fully funded in 2022. This allows pretax dollars from the HSA to continue to grow while pretax LPFSA funds pay for vision and dental expenses.Įmployees can contribute up to $2,850 to their LPFSAs in 2022, up $100 from 2021.The HSA contribution limit for an individual is $3,650 in 2022. Having a LPFSA is an exception to that rule.Īn individual can use their LPFSA funds to pay for vision and dental expenses before tapping into their HSA funds. You typically aren’t allowed to contribute to both an HSA and FSA at the same time. Some employers may allow you to use your LPFSA to pay for qualified medical expenses after you reach your insurance deductible.Īnother key difference is that a LPFSA can be paired with a health savings account (HSA). On the flip side, health FSAs can cover a variety of medical expenses allowed by the IRS, such as acupuncture, birth control pills, and monthly menstrual supplies. A LPFSA can typically only cover qualified vision and dental expenses. The difference between a limited-purpose FSA and a FSA is what they cover. If you contribute $2,500 for the year, your taxable income drops to $97,500. Let’s say you earn $100,000 and have a LPFSA. Every penny that you contribute to these accounts can reduce your taxable income. That means the money goes from your paycheck to the FSA before taxes are withheld. What’s the difference between FSA and LPFSA?īoth of these accounts allow employees to make pretax contributions. This account is exclusive to individuals who work for a company that offers limited-purpose FSAs. Retired individuals and those who are unemployed also don’t qualify for a LPFSA. However, they can open a health savings account (HSA) if they have a qualified HDHP and want to gain tax benefits for health expenses. Self-employed individuals do not qualify for an LPFSA or a traditional health flexible savings account (FSA). An LPFSA covers the employee, their spouse, and any eligible dependents. This account is only available if an employer offers it. Who qualifies for a LPFSA?Įmployees with a qualified high-deductible healthcare plan (HDHP) and health savings account (HSA) may choose to have a limited-purpose FSA. In some cases, you can use your LPFSA to pay for out-of-pocket expenses related to other qualified medical expenses after you reach your insurance deductible.īelow, we will discuss how a LPFSA works and what expenses qualify. Unlike a regular health FSA, this employer-sponsored account is primarily used to pay for qualified dental and vision expenses. These accounts are typically combined with a health savings account (HSA) to help families increase their healthcare savings during the year. A limited-purpose flexible spending account (LPFSA) is a pretax account only available to employees enrolled in a qualified high-deductible healthcare plan (HDHP).
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