Designed only for submitting eligible dental and vision expenses, the Limited Expense HCFSA is used as a replacement for the old good HCFSA when the participant owns a High Deductible Health Plan with an HSA. This is so because the IRS doesn’t allow for the HSA participants to participate as well in the HCFSA plan. While the traditional plain HC Flexible Spending Account will reimburse you for eligible eye care, dental, and medical prescription expenses made during the plan year, the Limited Expense HCFSA will do so only for eligible eye care and dental expenses.
This Flexible Spending Account is much like the plain HCFSA, you’d put your pre-tax money on and use it to pay for certain dental and vision care expenses. This account can cover the expenses of both yourself and your dependents, as well as your spouse. The same IRS rules and regulations apply to Limited HCFSA as for another Flexible Spending Accounts – the same minimum/maximum, same claim filing deadline, and the same use-or-lose rule. However, with this plan, you can have accessible money to pay for the eligible expenses and pay back the plan later in the same benefit plan year. Furthermore, you can withdraw your full annual health Flexible Spending Account election anytime no matter how much money have you deposited by now.
So, why is this done this way? Why participate in both Limited Expense HCFSA and HSA? The answer is simple – to maximize your savings and tax benefits, of course, to do so the purchase date of the items or services must be in the range of the current benefit plan year.