Limited Purpose FSA or better known as a Limited Expense HCFSA, brings us the privilege to own both an HCFSA and HSA. The thing is that participants in the HSA plan weren’t eligible to own an HCFSA up until the Limited Purpose was brought up to the light. This helps the participants to save on taxes up to 30 cents on the dollar while at the same time they’re setting aside money for some out-of-pocket healthcare expenses no matter if it’s individual or for families.
- Let’s start with the most important part of both plans – the contributions the participants can make to their accounts. HSA offers tax-free contributions with limits up to $3,550 for individuals and $7,100, while the Limited Purpose FSA there is no option for family contribution but only for individual ones that can go up to $2,700. Although, with the Limited Purpose FSA you can also cover your family’s and all of your dependents’ eligible health expenses. Also, you and your spouse can combine both Limited Purpose FSAs and jointly contribute up to $5,500 in tax-free money per household
- Your HSA funds will cover the eligible dental and vision expenses but also will cover health care expenses. However, the Limited Purpose FSA plan will cover only the eligible dental and vision expenses. Check out Vision Specialist Store to get top deals on exclusive eyewear.
- The Uniform Coverage Rule for the Limited Purpose FSA indicates that the full amount of reimbursement from the plan is available at any time during the benefit year. Let’s say you have chosen to contribute $2000 in the specific plan, so, if you have an expense worth $2,000 on the first day of the plan year, you’d be able to cover all the expenses from the account. While at the same time, even if the available balance on your Limited Purpose FSA is used, your pay period deduction rate isn’t going to change at all.
Having both a Limited Purpose FSA and HSA, you get the maximum of them both in terms of savings and tax benefits.