<img height="1" width="1" src="https://www.facebook.com/tr?id=765055043683327&amp;ev=PageView &amp;noscript=1">

What is a Limited Purpose FSA? (And Should You Offer One?)

Jeff Griffin

With the rising cost of health insurance, many consumers are opting for high deductible health plans (HDHPs) to keep their medical premiums affordable, especially when they’re relatively young, comparatively healthy, and don't spend much of their budget each year visiting a doctor. However, many people enrolled in qualified HDHPs are disappointed to learn they can no longer, by law, participate in a traditional flexible spending account (FSA). 

The nature of how these plans are designed leaves some wondering how they’ll cover all the expenses incurred prior to reaching their deductible, which has led to the rise of health savings accounts (HSAs) and limited purpose flexible spending accounts (LPFSAs).

Only those enrolled in qualified HDHPs are eligible to open an HSA and reap the tax benefits, but many are unaware that they’re also eligible to open a limited purpose FSA (providing their employer offers one), which frees up the money in their HSA for future use — even retirement. 

What Is a Limited Purpose FSA?

HSAs are usually a major selling point of HDHPs. They allow participants to set aside a portion of their income from each paycheck in order to pay for qualifying healthcare expenses. Limited purpose FSAs are like HSAs in that participants can contribute a specific amount from each paycheck. LPFSAs are like traditional FSAs in that they make funds available immediately, rather than forcing you to wait until enough money has accumulated to access the money you need for necessary vision and dental care (whereas HSAs require funds to be in the account before reimbursement can occur).  

Read More
Topics: HSAs, Consumer Driven Healthcare, High Deductible Health Plans, Savings Plans

Related posts

Subscribe for New Blog Post Notifications

Most Read

Posts by Topic

Expand all
Free_White_Paper_Employee_Benefits_Branding
Free_White_Paper_Private_Exchange_Employee_Benefits
Free_White_Paper_Employee_Benefits_Branding
Free_White_Paper_Employee_Benefits_Hospitality
Free_White_Paper_Improving_Employee_Benefits_Communications
Free_White_Paper_Employee_Benefits_Construction
Free_White_Paper_Employee_Benefits_Branding