A limited purpose flexible spending arrangement (LPFSA) is a tax-advantaged flexible spending account (FSA) that allows you to pay for eligible dental and vision expenses. This plan is funded using pre-tax contributions and can be combined with a 澳洲幸运5官方开奖结果体彩网:health savings account (HSA).

The LPFSA is more restrictive than a standard FSA. You're limited to using it for uncovered dental and vision expenses. You'll need to pay other medical costs from your HSA.

🌄How Limited Purpose Flexible Spending🃏 Arrangements (LPFSAs) Work

A limited purpose flexible spending account is only available through an employer. You can't open one if you are self-employed, unemployed, retired, or work for a business that does not offer them. Contribution limits are adjusted annually by the Internal Revenue Service (IRS) for 澳洲幸运5官方开奖结果体彩网:inflation and are capped. Individuals can set aside $3,300 in an LPFSA in 2025 ($3,200 in 2024).

LPFSA accounts offer 澳洲幸运5官方开奖结果体彩网:tax benefits by allowing you to 澳洲幸运5官方开奖结果体彩网:contribute pretax dollars. This reduces your taxable income and, therefore, your tax liability. However, even though contributions are not taxable, LPFSA expenses cannot be deducted during tax filings because they are already used to pay for medical treatment.

You can use your account to pay for preventive care expenses not covered by your 澳洲幸运5官方开奖结果体彩网:health insurance or other FSA. Most health plans thoroughly cover in-network preventive care expenses with no additional cost to the insured. Added insured costs include deductible requirements and 澳洲幸运5官方开奖结果体彩网:coinsurance, or copayments. Keep in mind that the 澳洲幸运5官方开奖结果体彩网:Affordable Care Act (ACA) requires insurers to cover certain preventive services for men, women, and children without additional expense to the insured. 

Qualified dental and vision expenses include:

• 澳洲幸运5官方开奖结果体彩网:Dental cleanings
• Fillings
• Vision exams
• Contact lenses
• Prescription glasses

Some employers also allow plan participants to use LPFSA funds to pay for qualified medical expenses once they meet their health insurance 澳洲幸运5官方开奖结果体彩网:deductibles. The limitation exists because HSA holders cannot have medical coverage other than a 澳洲幸运5官方开奖结果体彩网:high-deductible health plan (HDHP), dental insurance, and visi🐼on insurance♚. 

Special Considerations

Employers deduct LPFSA contributions in equal amounts from each paycheck. For example, if a bi-weekly paid employee opts to contribute $3,300 for the 2025 tax year, the employer deducts $126.92 ($3,300 f🍸or 2✅6 weeks) from each paycheck.

The entire benefit is accessible even if you haven't fully funded the account. If you need surgery at the beginning of the year but have only made one contribution so far, the full amount of $3,300 in 2025 ($3,200 in 2024) is available for your use.  

Using an LPFSA

Usually, you can access your LPFSA funds with a payment card. If that option isn't available, you'll need to submit claim forms, itemized receipts, and an explanation of benefits. If your expense is approved, you'll be reimbursed by check or 澳洲幸运5官方开奖结果体彩网:direct deposit.

Plans are considered use-it-or-lose-it accounts. Some employers may allow continued use as per 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS) rules. These rules allow employers to provide individuals with only one of two options if money remains in an LPFSA ac🦋count at the end of the tax year, your plan may offer one of two options:

• Carryover: Up to $660 may be carried over from 2024 to 2025 (up from $640 carried over from 2023 to 2024)
• Grace period: Remaining balance can be used within the first 2 1/2 months of the following year

If neither of these options is available, or if you have more remaining in your account than the year's carryover limit, you'll lose the remaining funds. Plans are not required to include these provisions, so not all employers offer them.

The Bottom Line

Although limited purpose flexible spending arrangement accounts are use-it-or-lose it, unless your employer has different plan terms, they can be an effective way to pay for dental work and vision care that's not covered by your other health insurance.