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What is a Limited Purpose Flexible Spending Account (LPFSA)?
It is a Flexible Spending Account you can enroll in when you have a Health Savings Account. It allows you to be reimbursed tax-free for dental and vision expenses. You elect the dollar amount you want to contribute and the money is deducted in equal installments from your paychecks before taxes are withheld. You will be reimbursed once you show proof that the service was received and that it was for a qualified expense. Participants in the plan will save up to 30% in taxes on out of pocket expenses.
In addition to the tax savings, you have the benefit of having access to your entire election amount as soon as the plan year begins. It is like receiving an advance payment to pay for your expenses, meaning if you incur an expense early in the plan year, you can use up to your entire election amount to pay your bill. The money will be deducted from your paycheck over the course of the entire year, easing your financial burden.
How is the LPFSA funded?
During open enrollment, you choose how much you want to deduct tax-free from each paycheck. For example, if you are going to spend $1,300 on dental/vision expenses during the plan year and are paid 52 times per year, the pre-tax deduction per check will be $25. You will save up to 30% in taxes on the expenses that are incurred.
What expenses qualify under a LPFSA?
Examples of qualified expenses include:
- Dental Expenses: cleanings, x-rays, fillings, caps, crowns, braces, bridges
- Vision Expenses: eye exams, glasses, frames, lenses, contact lenses, saline solution, LASIK surgery
Can I submit qualified expenses incurred by my spouse and dependents?
Yes, qualified expenses for your spouse and dependents are eligible for reimbursement as well as expenses for your children up to age 26.
How do I enroll in a Limited Purpose Flexible Spending Account?
Each year your employer will have an open enrollment period and you will have the option to elect or waive participation. You will be provided with information on the features and benefits of your plan and the open enrollment deadline. During that time you will be given the opportunity to determine your election amounts for the plan year.
What if I have money left in my account at the end of the year?
Plan conservatively as expenses need to be incurred during the LPFSA plan year. Unused funds may be subject to the use-or-lose provision, depending on your employer’s plan design. Very few people leave money left in the plan because they only set aside dollars for known expenses such as dental cleanings, glasses or contact lenses.
Can I change my election or stop contributing during the year if I have elected more than I need?
It’s important to plan carefully so that your election amount does not exceed your expenses. You are not allowed to change your election during the plan year except in limited circumstances such as marriage, divorce, birth, death, etc.
What is carry-over and how do I know if it is a part of my plan?
If the carry-over feature is a part of your employer’s plan, you can carry-over up to $500 of remaining funds from one plan year into the next, thereby eliminating the use-or-lose provision. The carry-over feature applies to the Health Care FSA (HCFSA) and Limited Purpose FSA (LPFSA).
If you are not sure if this feature is a part of your plan, check with your Human Resources department or employer’s benefits representative.
What is the grace period and how do I know if that is a part of my plan?
The grace period is a 2 ½ month extension after your plan year ends when you can incur expenses in order to spend down any money left in your account. If you are not sure if this feature is a part of your plan, check with your Human Resources department or employer’s benefits representative.
How do I file a claim for reimbursement?
Claims and supporting documentation can be submitted by the following methods:
- Mobile phone app
- Download claims filing instructions and forms. >
How and when do I receive reimbursement for my claims?
Reimbursements will be issued to you either by check or direct deposit, depending on the design of your plan. Your employer determined a reimbursement schedule and will provide that information to you during open enrollment. You can also review plan details online at DBSbenefits.com.
What supporting documentation needs to be submitted with my claim?
Please only submit copies of documentation and keep the originals for your records.
Explanation of Benefits (EOBs) are the best form of documentation as they contain all of the needed information. If an EOB is not available, documentation must include the following:
- Date of service (this is different from the statement or transaction date)
- Provider of Service
- Type of service or explanation of service
- Your out of pocket expense (after insurance has paid – if applicable)
What is a run-out period?
The run-out period is the period of time after the end of the plan year that you have to submit claims for expenses incurred during the plan year.
What happens to my funds if I leave my employer?
If you leave your employer and there is money left in your account, you have a termination run-out period to submit claims for expenses incurred prior to your termination date. You may be able to elect COBRA to continue your plan coverage through the end of the plan year. If you do not elect COBRA and there is money left in your account, the money stays with your employer. Please check with your Human Resources department to see if your plan is subject to COBRA.
How can I view my account information?
Once you are enrolled in the LPFSA, you have access to your account information through the DBS online account viewing system known as A.S.A.P.®, which allows you to securely view your claim, balance and reimbursement information.