Employee Benefits with the Human Touch
Limited Purpose Flexible Spending Account
A Limited Purpose Flexible Spending Account (LPFSA) allows employees to contribute pre-tax dollars to pay for dental and vision expenses.
Hand in Hand with an HSA
A Limited Purpose Flexible Spending Account (LPFSA) is a specialized benefit that allows employees to save on qualified dental and vision expenses while enrolled in a Health Savings Account (HSA). As an employer, offering an LPFSA can enhance your benefits package by providing employees with an additional way to save on essential healthcare services, all while ensuring compliance with HSA eligibility requirements. Here’s what you need to know about sponsoring an LPFSA plan.
What is a Limited Purpose FSA (LPFSA)?
A Limited Purpose FSA is similar to a traditional Healthcare FSA, but with a key difference: it is restricted to covering only certain types of expenses, specifically dental and vision care. This is designed for employees who are enrolled in a Health Savings Account (HSA), as having both an HSA and a regular Healthcare FSA is generally not allowed.
Key Features:
- Pre-tax contributions: Employees can contribute pre-tax dollars to their LPFSA, which helps lower their taxable income.
- HSA Compatibility: The LPFSA is an ideal choice for employees with an HSA, as it allows them to use funds for dental and vision expenses without jeopardizing their HSA eligibility.
- Tax Savings: Employees benefit from tax-free contributions, which can significantly reduce out-of-pocket costs for dental and vision care.
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Eligible Expenses
An LPFSA is designed to cover only specific types of expenses, ensuring that employees have a dedicated account to cover their dental and vision care costs. Eligible expenses include:
Dental Expenses
- Preventive care (e.g., cleanings, exams)
- Restorative care (e.g., fillings, crowns)
- Orthodontics (braces, retainers)
- Dentures and other dental devices
Vision Expenses
- Eye exams and glasses
- Contact lenses and contact lens solution
- LASIK or other vision correction surgery
- Prescription sunglasses
How an FSA Saves
Employers
Participants
How it Works
For Employers
The Employer hosts Open Enrollment with employees and enrolls those who wish to sign up for the LPFSA.
The Employer deducts pre-tax contributions from each participant’s paycheck. These contributions are held by the Employer.
EMPOWER administers the Plan and issues reimbursements to employees. The Employer only pays for expenses used by employees.
For Participants
Employees enroll in the LPFSA and choose annual their annual elections.
The Employer deducts pre-tax contributions from each participant’s paycheck.
Participants pay for eligible expenses with the EMPOWER Visa Debit Card or seek reimbursement from EMPOWER.
Tailored to Your Needs
Employers can customize their plans through many options, including:
Reimbursement Methods
- EMPOWER Visa Debit Card
- Check
- Check Register sent to Employer
- Direct Deposit
Carryover
Employers can choose how unused funds can be used in the next Plan Year.
Contribution Limits
Employers can choose the maximum annual election limits for participants.
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