A limited purpose flexible spending account (LPFSA) allows consumers to use pre-tax dollars to cover vision and dental medical expenses. Learn how it pairs with an HSA for even greater advantages.
A limited-purpose flexible spending account (LPFSA) is a type of flexible spending account (FSA) that allows consumers to use pre-tax dollars to cover specialized vision and dental medical expenses out-of-pocket.
Consumers can only enroll in an LPFSA through their employer. They then elect a specific amount of money to be taken out of their paycheck pre-tax and their account through their paycheck pre-tax. Unlike a traditional FSA, an LPFSA must be paired with a high-deductible health plan (HDHP) and can be paired with a health savings account (HSA) to cover vision and dental needs before a consumer reaches their deductible.
LPFSAs allow consumers to set aside money pre-tax to pay for out-of-pocket dental and vision expenses, which can save them an average of 30% on medical expenses a year. Plus, consumers can reap even more benefits from an LPFSA when they pair it with an HSA. Doing so allows them to stretch their tax savings further because they can contribute a maximum amount to both accounts. By using LPFSA dollars to cover dental and vision expenses, HSA dollars can be reserved for covering medical expenses, saved for future medical expenses or invested for growth.
LPFSA contributions can be used to cover qualified vision and dental expenses. These expenses include:
By understanding and utilizing the benefits of an LPFSA, you can take a proactive step toward more efficient and tax-advantaged healthcare spending.