Do I need a limited purpose FSA?
Asked by: Eliza Ondricka | Last update: November 30, 2025Score: 4.6/5 (63 votes)
Is a limited purpose FSA worth it?
The bottom line
A limited-purpose FSA may be a good consideration for those who want an additional tax-advantaged account to pay for high dental or vision expenses. Your employer may also allow you to use your LPFSA to pay for additional medical expenses after you've reached your insurance deductible.
Why do I need a limited purpose FSA if I have an HSA?
To keep more of your HSA money, it might be a good idea to contribute the max to your HSA and then also contribute an additional $1,100 to an LPFSA. Then you can use your LPFSA to pay for those expected dental and vision expenses, while still saving the full annual maximum in your HSA.
What is the difference between a general purpose FSA and a limited purpose FSA?
Unlike a general-purpose health FSA, however, funds in a limited-purpose health FSA can only be used to pay for qualifying dental, vision and orthodontia expenses. It is set up in this way so that it can be used alongside a Health Savings Account (HSA).
Do I really need an FSA?
Do I need an FSA? Not necessarily. It depends on your financial situation, needs, and preferences. For example, an FSA may be a good idea if you anticipate regular medical expenses or want to lower your taxable income.
What Are Limited Purpose Flexible Spending Accounts? | HealthEquity Benefits Qs
Is there a downside to FSA?
Use-it-or-lose-it refers to an IRS requirement that if you do not spend all the money you have elected into your account, that money remaining in an FSA after March 15 of the following year will be forfeited because it cannot be rolled over or refunded to you.
What happens if you don't use FSA?
If you don't use all of your FSA funds during the benefit period, you risk losing money. However, the HCFSA and the LEX HCFSA have Carryover, which allows you to carry over up to $660 in unused funds into the next benefit period if you reenroll in FSAFEDS. Any remaining unused funds over $660 will be forfeited.
Can you use limited purpose FSA for Invisalign?
Invisalign orthodontics reimbursement is eligible with a flexible spending account (FSA), health savings account (HSA), health reimbursement arrangement (HRA) or a limited-purpose flexible spending account (LPFSA).
Can I use limited FSA for sunglasses?
In most cases, non-prescription sunglasses are not eligible for payment with FSA funds. However, reading sunglasses like our SunReaders® are FSA-eligible because they help correct presbyopia. Reading glasses (without tinted lenses) are also FSA-eligible for this reason.
Is an HSA or FSA better?
Bottom line: Both HSAs and FSAs provide financial benefits for managing health care expenses. HSAs offer more flexibility and long-term growth potential, making them a valuable tool for future financial planning. Learn about HSA options from Aetna.
What is the IRS rule for limited-purpose FSA?
The IRS created this rule, which states that all money left in your FSA is forfeited after the plan year ends, or if applicable, after the run-out period. If your limited-purpose FSA has a carryover feature, you may carry over up to $500 of unused funds into the next plan year.
What happens if I contribute to HSA and FSA in the same year?
Not Allowed
You can't contribute to a Health Savings Account (HSA) and have a general purpose Health Flexible Spending Account (FSA) for overlapping months. And, if you are married, your spouse can't have a general purpose Health FSA at the same time either.
What happens if I don't use all HSA?
Myth #2: If I don't spend all my funds this year, I lose it. Reality: HSA funds never expire. When it comes to the HSA, there's no use-it-or-lose-it rule. Unlike Flexible Spending Account (FSA) funds, you keep your HSA dollars forever, even if you change employers, health plans, or retire.
Can both spouses have an FSA 2025?
For the 2025 plan year, contributions to an FSA are limited to $3,300 per person. Married couples can therefore contribute a combined $6,600 if they each have an FSA.
Can you reimburse yourself from Lpfsa?
To use the funds you've contributed to your LPFSA, your plan administrator will either give you a payment card or let you submit a claim form to request reimbursement by check or direct deposit. For some plans, both options will be available.
How much do you put into limited purpose FSA?
You can contribute up to a maximum of $3,300.00 * to your Limited Expense Health Care FSA each year. Keep in mind, you may carry over up to $660.00 remaining in your account from one plan year to the next.
Are gym memberships FSA eligible?
The Internal Revenue Service (IRS) usually doesn't allow funds from an FSA to pay for membership dues at health clubs or gyms. However, the IRS allows FSA funds to be used for paying separate fees charged at health clinics or physical therapy centers for specific activities prescribed by doctors for an individual.
Should I use a limited FSA?
Is a limited purpose FSA right for me? If your employer offers an LP-FSA, enrolling in one can be an excellent option if you're looking to reduce your dental and vision expenses while capitalizing on potential tax savings.
Is electric toothbrush FSA eligible?
Unfortunately, most products for oral health care are not currently eligible medical expenses for FSA and HSA spending.
Can I use limited FSA for toothbrush?
The IRS may request itemized receipts to verify the eligibility of your expenses. Credit card receipts, canceled checks, and balance forward statements do not meet the requirements for acceptable documentation. Eligible? Hygiene Products (toothbrush, lotion, soap, etc.)
Can I use my FSA for CoolSculpting?
Skin care services focused on improving your skin's appearance are not FSA eligible. These include facials, microdermabrasion, laser resurfacing, chemical peels, and any type of cosmetic surgery. These aren't covered even if they're performed by a dermatologist. Botox, fillers, and CoolSculpting also do not qualify.
Can I use limited purpose FSA for LASIK?
Limited purpose FSAs cover dental, vision, and other expenses like LASIK but not medical or prescription costs.
What is a disadvantage of an FSA?
However, there are also some disadvantages to be aware of. One of the best known is the “use it or lose it” feature. Any amounts contributed to an account and not spent by the end of the year are forfeited to the employer. However, an IRS ruling issued a few years ago softened this deadline considerably.
Is an FSA worth it?
A health care FSA can be useful for people with any level of health costs because it provides access to the entire annual amount elected, beginning on the very first day of the plan year for medical, dental, and vision costs. So, if you have an unexpected large expense, you can access the funds you need.
What happens if I use my FSA incorrectly?
If the Benefits Card is accidentally or intentionally utilized for ineligible expenses, you are responsible for reimbursing your account. You will be notified if you have an ineligible expense and your Benefits Card may be deactivated until your account is reimbursed.