If you are enrolled in the High Deductible Health Plan (HDHP) along with the Health Savings Account (HSA), you may participate in a Limited Purpose Flexible Spending Account (FSA) to pay for dental and vision care with pre-tax dollars. It’s important to note that you cannot participate in both a HSA and a general purpose Health Care FSA. You may use your Health Savings Account funds to pay for regular medical expenses. Consider participating in both the HSA and Limited Purpose FSA to maximize your savings and tax benefits.
The annual maximum contribution you can make to the Limited Purpose FSA is $2,750 in 2020.
Some expenses eligible for reimbursement through a Limited Purpose FSA include:
Dental: cleanings, coinsurance, copays, crowns, deductibles, dental treatment, dentures, denture adhesives and cleaners, fillings and orthodontics.
Vision: contact lenses, contact solutions and cleaning products, eye drops, eye exams, prescription glasses and sunglasses, refractions, vision correction procedures (e.g., Lasik) and vision screenings.
Note: The IRS requires a prescription for over-the-counter (OTC) medication to be eligible for reimbursement from an FSA.
Up to $500 in unused Limited Purpose FSA contributions will automatically carry over to the next calendar year and can be applied to eligible expenses in that year. The carryover amount does not require an election amount or any payroll deduction and will be deposited into your Limited Purpose FSA on May 15 every year. Claims will first be paid from the current plan year’s balance and then deducted from any carryover amounts.