Overview & Eligibility
A limited purpose FSA (LPFSA) is a special type of FSA that allows employees to set aside tax-free money to pay for eligible dental and vision expenses. What makes an LPFSA unique is that it can be used in conjunction with a health savings account (HSA), allowing employees to grow their HSA funds while using the LPFSA to pay for immediate dental and vision needs.
Employers can offer an LPFSA to their employees even if they don’t offer a group health plan. Employees are not required to participate in a group health plan in order to enroll in an LPFSA.
2023 Contribution Limit:
This is the maximum amount that can be contributed to an LPFSA each year per the IRS.
The Value for Employees
Employees can save up to 40% on qualifying expenses such as vision appointments, LASIK, contact lenses and solution, glasses, teeth cleaning, dentures, and dental and vision copays. Employees can contribute to an LPFSA and HSA in the same plan year, allowing them to save and grow their HSA balance, while using the LPFSA to pay for everyday expenses.
Every dollar an employee contributes to a LPFSA lowers their taxable income. Let’s say an employee earns $40,000 a year and contributes $1,500 to a LPFSA. That means only $38,500 of their income gets taxed.
Employees will receive an Ameriflex Debit Mastercard® linked to their LPFSA. Employees can use their card for eligible purchases everywhere Mastercard® is accepted. Account information can be securely accessed 24/7 online and through the mobile app.
The Value for Employers
Since contributions to LPFSAs are taken out pre-tax, no payroll taxes are due on the amounts employees contribute to the LPFSA.
Helping employees save money on their everyday vision and dental costs can aid in employee retention and recruitment.
Healthcare is complicated. The Ameriflex Client Relationship Team is eager to answer questions and provide assistance. Our 85+ Net Promoter Score (NPS) far exceeds the healthcare average.