Limited Purpose Flexible Spending Account

Limited Purpose Flexible Spending Account

The Limited Purpose Flexible Spending Account (LPFSA) is a flexible spending account that only reimburses you for eligible dental and vision expenses.  The LPFSA is available to employees who are enrolled in the Carnegie Gold Plan (HDHP) as well as an HSA.

Money is set aside from your paycheck before taxes are taken out. You can then use your pre-tax FSA dollars to pay for eligible vision or dental expenses throughout the plan year. You save money on expenses you’re already paying for, like dental checkups, vision exams, eyeglasses, and more.

Why is it a good idea to have a limited-purpose FSA? 

IRS rules do not allow you to contribute to a general-purpose health FSA if you are covered by any non-qualifying health plan. By limiting FSA reimbursements to dental and vision care expenses, you (or your spouse) remain eligible to participate in both a limited-purpose FSA and an HSA.  Participating in both plans allows you to maximize your savings and tax benefits.

What expenses are eligible under a limited-purpose FSA?

A limited-purpose FSA covers qualified out-of-pocket expenses for dental or vision care provided to you, your spouse, or dependents. Typical eligible expenses include:

Qualified Dental Expenses

  • Cleaning
  • Fillings
  • Crowns
  • Braces

 Qualified Vision Expenses

  • Contact lenses
  • Eyeglasses
  • Eye exams
  • Vision correction procedures

What expenses are not covered under a limited-purpose FSA?

Expenses that are not approved are called “ineligible expenses.”  Ineligible limited-purpose FSA expenses include:

  • Insurance premiums
  • Medical expenses, including deductibles, co-insurance, and co-pays
  • Alcohol and drug rehab expenses
  • Prescription medicines
  • Over-the-counter medicines and items
  • Medical equipment
  • Contraceptives
  • Cosmetic procedures
  • Expenses for services incurred after the coverage period ends
  • Expenses reimbursed by an insurance provider or other health plan
  • Personal use items, such as toothpaste, razors, and shampoo
  • Dental whitening procedures and kits

Here are some other IRS rules you should know about:

  • No double-dipping - Expenses reimbursed under your limited-purpose FSA cannot be reimbursed under any other plan or program – including an HSA. Only eligible out-of-pocket expenses may be reimbursed.  Plus, expenses reimbursed under this FSA may not be deducted when you file your tax return. 
  • Timing is everything - FSAs have a start date and an end date, and the time in-between is called the plan year.  Expenses must be incurred during the FSA plan year.  As noted in IRS guidelines, expenses are incurred when you (or your spouse or dependents) are provided with the vision or dental care that gives rise to the eligible expenses, and not when you are formally billed, charged for, or pay for the services. This means the date of service must be within the current plan year and not when you pay for the service.

Is there a limit to how much I can contribute to my limited-purpose FSA?

Limited Purpose FSA Maximum 2022 Contribution:  $2,850

  • Carnegie employees may contribute up to $2,850 to a Limited Purpose Flexible Spending Account (LPFSA) in 2022.  The total amount selected will be divided by the remaining pay periods in the calendar year.
  • Maximum contribution limits change annually based on IRS determinations.

Limited Purpose Flexible Spending Account Grace Period

You generally must use the money in an FSA within the plan year.  However, Carnegie provides a "grace period" of up to 2 ½ extra months to use the money in your FSA.

At the end of the year or grace period, you lose any money left over in your FSA.  So, it's important to plan carefully and not put more money in your FSA than you think you'll spend within a year on things like copayments, coinsurance, drugs, and other allowed health care costs.

Flexible Spending Debit Card

The FSA debit card, administered through Benefit Strategies, pays for many eligible health care expenses at the point of sale using funds from an employee's health care FSA. That means less hassle and less paperwork. 

How do I keep track of my account activity?

Register with WEX and login to your account regularly to check balances, view claims, verify expenses, upload copies of receipts, and more.