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LPFSA Tips: A Benefits Account Made to Help You Smile

LPFSA tips

When you have a Health Savings Account, you can also sign up for a Limited Purpose Flexible Spending Account (LPFSA). Having both accounts is a great way to save even more on taxes and cover those necessary healthcare related expenses. But, when you have both an HSA and Limited Purpose FSA, you may need some tips for how to maximize each account. Learn how your LPFSA can put a smile on your face below.

What is a Limited Purpose FSA?

Before we jump into the tips, let’s quickly cover what is a Limited Purpose FSA. By law, an LPFSA is available only for people who also have an HSA. The LPFSA provides an extra way to save money on taxes and healthcare. Each calendar year, you can contribute up to the IRS maximum limit in addition to contributing the max amount your HSA.

With an HSA, you can cover any IRS-qualified healthcare expense. These include copays, deductibles, prescriptions, ambulance rides, and many other services and products.

However, as the name implies, a Limited Purpose FSA cannot be used for all healthcare expenses. You can only use it for qualified eye and dental care expenses, including copays.

LPFSA Eligible Expenses

An LPFSA can cover many costs related to eye care, including correction procedures for cataracts, glaucoma, myopia, hyperopia and astigmatism. Keep in mind, some products may require a prescription.

Eye care eligible expenses:

  • Eye exams
  • Prescription eye glasses, contacts and
  • Vision correction (LASIK, PRK, etc.)
  • Contact lens solution
  • Eye wear repair kits
  • Eye drops

In addition to eye care, most common dental care can be paid for with an LPFSA, including common dental exams and procedures, such as:

  • Dental exams
  • X-rays
  • Cleaning
  • Braces and other orthodontia
  • Cavities, fillings, crowns, etc.

LPFSA Tips for Account Holders

Think of an LPFSA as a compliment to your HSA. When you have both an LPFSA and HSA, keep in mind a few simple things to maximize your accounts.

First, if you and your family have a lot of vision and dental expenses, put in as much as you can afford (up to the annual limit). Like a healthcare FSA, your LPFSA may let you carry over up to $640 starting in 2024 if you don’t use it all by the end of the plan year.

Second, when it’s time for those costly eye and dental exams and procedures, use your LPFSA money first. It’s important to remember that your HSA is yours for life. All of the unused money rolls over, so if you don’t spend it, you can build up your account. Since your LPFSA is use-it-or-lose-it, you will want to use up those dollars as early in the plan year as possible.

Third, use your benefits card when possible (it’s just like regular debit card) and keep all of your receipts. Not only can you keep track of how much you spend, which will help you estimate for next year, but your benefits administrator could ask you to verify your purchases. If you have a mobile app, that’s also a good way to keep track of what’s in your account.

Doesn’t that make you smile? With the extra tax savings and the ability to cover those eye and dental expenses, your LPFSA is valuable. Make it work even hard for you by keeping these tips and guidelines in mind.