A limited purpose FSA (LPFSA) can be used for qualifying dental and vision expenses only. It exists specifically for people who have a health savings account (HSA) alongside a high-deductible health plan, since enrolling in a regular health care FSA would disqualify you from contributing to an HSA. By restricting coverage to dental and vision, the LPFSA lets you keep your HSA intact while still getting pre-tax savings on two of the most common out-of-pocket costs.
Eligible Dental Expenses
You can use your LPFSA to pay for routine dental care like cleanings, exams, X-rays, fillings, crowns, root canals, extractions, and dentures. Orthodontic treatment, including braces, is also eligible and has its own set of payment rules worth understanding (more on that below). The account covers expenses for you, your spouse, and your dependents.
Eligible Vision Expenses
Vision expenses covered by a LPFSA include eye exams, prescription glasses, prescription sunglasses, contact lenses, and contact lens solution. LASIK and similar corrective eye surgeries are generally eligible as well. However, not every procedure qualifies. Corneal keratotomy, for instance, is listed as ineligible under the federal FSAFEDS program. If you’re unsure about a specific procedure, check with your plan administrator before paying.
What You Cannot Use It For
A LPFSA cannot be used to cover general medical expenses or over-the-counter products. That means doctor visits, prescription medications, hospital copays, physical therapy, lab work, and common drugstore health items are all off the table. These would be covered by a regular health care FSA or your HSA, but not by the limited purpose version. If you use LPFSA funds for ineligible expenses, the amount becomes taxable and you may face an additional tax penalty.
The Post-Deductible Exception
Some LPFSA plans include a feature that expands what the account covers after you meet your health plan’s annual deductible. Once you hit that threshold, you may be able to use LPFSA funds for broader medical expenses like copayments, physical exams, and vaccinations. This isn’t universal, though. It depends on how your employer’s plan is structured.
If your plan does allow post-deductible spending, you’ll typically need to complete an attestation agreement confirming you’ve met your deductible before you can use your LPFSA card for those expenses. Keep all receipts and documentation to prove your purchases were eligible.
How It Works With an HSA
The whole point of the LPFSA is HSA compatibility. IRS rules prohibit you from contributing to an HSA if you’re enrolled in a general health care FSA, because a regular FSA can reimburse any medical expense, which conflicts with the HSA requirement that you carry a high-deductible plan with real out-of-pocket exposure. A LPFSA solves this by limiting reimbursement to dental and vision, which the IRS considers a narrow enough scope to preserve your HSA eligibility.
The strategic benefit is straightforward: by paying dental and vision costs through your LPFSA, you leave more money in your HSA to grow tax-free. HSA funds roll over indefinitely and can be invested, making them a powerful retirement savings tool. Using a LPFSA for routine dental and vision costs keeps you from draining that long-term balance on predictable annual expenses. The average tax savings on eligible out-of-pocket dental and vision costs runs around 30 percent.
Paying for Orthodontic Treatment
Orthodontics works differently from other dental expenses under a LPFSA. Most dental claims require the service to be performed and paid for within the same benefit period. Orthodontic treatment, which spans months or years, gets an exception: you can be reimbursed for pre-paid orthodontic expenses regardless of the date of service, as long as the payment was made during the current benefit period.
The simplest approach is setting up recurring monthly payments directly to your orthodontist through your FSA plan. This spreads the cost across multiple plan years so you can maximize your annual contribution each year rather than trying to cover a large lump sum at once. To set this up, you’ll need to submit a copy of your orthodontia service contract that includes the provider’s name, patient’s name, description of services, payment schedule with dates, and payment amounts.
A few practical details to keep in mind: your LPFSA balance needs to cover the full amount of each scheduled payment, because partial payments won’t be issued and underfunded requests get canceled. Recurring payments must be set up fresh each benefit year since they don’t carry over automatically. And if you paid a lump sum to your orthodontist in a prior year and only received partial reimbursement, you can claim the remaining amount in the current plan year as long as you re-enrolled and treatment is still ongoing.
Contribution Limits and Carryover Rules
For 2025, the maximum you can contribute to a LPFSA is $3,300, the same cap that applies to all health care FSAs. This is a $100 increase from the 2024 limit. Contributions come out of your paycheck before taxes, reducing your taxable income for the year.
One of the biggest concerns with any FSA is the “use it or lose it” risk. Most LPFSA plans now offer a carryover provision: up to $660 in unused funds can roll into the following plan year, provided you re-enroll. Some plans offer a grace period instead, giving you extra weeks after the plan year ends to spend remaining funds. Your employer chooses one option or the other (not both), so check which applies to you. If your plan allows carryover, you have a reasonable cushion, but you should still estimate your dental and vision spending carefully to avoid leaving money on the table.
Full Balance Available on Day One
Unlike an HSA, where you can only spend what you’ve deposited so far, a LPFSA gives you access to your full annual election amount on the first day of the plan year. If you elect $3,300 for the year, that entire amount is available in January even though your payroll deductions will trickle in over 12 months. This is useful if you have a large dental or vision expense early in the year, like getting new glasses or starting orthodontic treatment.