Limited Purpose FSA: Who Qualifies and What You Get
Learn how to use a Limited Purpose FSA to pay for specific dental and vision costs using pre-tax dollars.
A Limited Purpose FSA is a way to set aside money specifically to cover certain healthcare costs before taxes are taken out of your paycheck.
Who it's for
This option is designed for individuals who already have a Health Savings Account (HSA) but want an additional way to save for specific dental and vision expenses.
What you get
You get to use pre-tax dollars to pay for qualified health costs. This means the money is taken from your earnings before taxes are calculated, which can lower your overall tax bill while covering specific medical needs.
What it costs you
The primary cost is the loss of any remaining funds at the end of the year. This type of account typically follows a "use it or lose it" rule, meaning any money you do not spend by the deadline cannot be rolled over.
The catch to know
The biggest risk is forgetting to spend your remaining balance before the deadline. If you do not use the full amount by the end of the year, you may lose that money entirely.
How to apply
- Check with your employer to see if they offer this specific type of account.
- Confirm that you are also enrolled in an HSA.
- Calculate your expected dental and vision costs for the year to determine how much to contribute.
- Review the rules regarding your specific plan's deadline.
- Visit the official portal for more information: https://www.healthcare.gov/glossary/flexible-spending-account-fsa/