What is a Limited Purpose Flexible Spending Account (LPFSA)?

A Limited Purpose Flexible Spending Account (LPFSA) is an employer-owned account. You can put pre-tax money into this account to pay for eligible dental and vision expenses.

You can only put money into an LPFSA if:

You have a Health Savings Account (HSA)
Your employer offers an LPFSA

Some things to remember when opening an LPFSA:

An LPFSA is the only account you can pair with an HSA.
You can use LPFSA funds on vision and dental expenses that are eligible under an HSA. This allows you to save your HSA funds for other healthcare expenses or for retirement.

Contribution limits and changes

The 2023 contribution limit for an LPFSA is $2850.

There are only two scenarios when you can make changes to your LPFSA contributions:

During your annual open enrollment period
If you experience a Qualifying Life Event (QLE) that relates to your LPFSA funds

Example: You get married and add your partner to your health insurance. There are more people who may need to use your LPFSA, so you'll be able to add more money to the account (up to the annual contribution limit).

Eligible expenses

You can use your LPFSA to pay for eligible dental and vision expenses that you’d usually pay for out-of-pocket (with your own money). Eligible expenses include:

Dental and orthodontic care: Examples include fillings, x-rays, and braces
Vision care: Examples include eyeglasses, contact lenses, and Lasik eye surgery

Can I access my LPFSA funds if I leave my employer?

Because your employer owns your LPFSA, you can’t access these funds if you change or lose your job. However, you do own your HSA funds and can still access them if you leave your employer.

Can I use my LPFSA funds after my plan year has ended?

Your employer can choose to give you access to unused funds at the end of the plan year, but this isn’t required. If they do, there are limits to what funds you can access.

There are two ways your employer can choose to give you access to your funds:

Option one: Rollover

With rollover, up to $570 of your LPFSA funds will carry over into your next plan year. These funds will be available to you on top of the amount you choose to contribute in your next plan year.

Example: You contribute $2000 to your LPFSA in the 2022 plan year. At the end of the plan year, you still have $700 left. $570 of these remaining funds will rollover into your LPFSA for the 2023 plan year.

Option two: Grace period

You’ll have an extra 2 ½ months to use your LPFSA funds from the previous plan year.

Example: You contribute $1500 to your LPFSA. At the end of the plan year, you still have $200 left. You’ll have 2 ½ months to use the $200. If you don’t use it after 2 ½ months is over, you’ll lose access to the funds.

Note: Your employer can only offer one of these options, not both.

What if my employer doesn’t offer rollover or a grace period?

You’ll lose access to any money left over in your LPFSA. It’s important to keep this in mind, so you don’t contribute more money than you think you’ll spend within a plan year.