Limited Purpose FSA
An example of a Flexible Spending Account (FSA) known as a Limited Purpose FSA lets employees save money before taxes for qualified dental and vision expenses. A Limited Purpose FSA, in contrast to a regular FSA, can only be used for specific health care costs. A regular FSA can be used for a wide range of medical expenses. A benefit of a Limited Purpose Flexible Spending Account (FSA) is that it allows employees to defer their taxable income by putting money aside before taxes to pay for qualified out-of-pocket expenses.
Employees must already be enrolled in a high-deductible health plan (HDHP) that complies with IRS guidelines to be eligible for a Limited Purpose Flexible Spending Account. A minimum deductible of $1,400 for individuals and a maximum out-of-pocket limit of $7,000 for individuals and $14,000 for families must be included in the HDHP. If a worker isn’t signed up for a HDHP, they are not qualified for a Restricted Reason FSA.
Routine dental cleanings and procedures, eye exams, prescription eyeglasses and contacts, and orthodontic work are all common expenses that can be covered by a Limited Purpose Flexible Spending Account. However, to ensure that their expenses are eligible for reimbursement, employees should carefully review the guidelines of their plan.
In conclusion, a Limited Purpose Flexible Spending Account (FSA) is a tax-free account that can assist employees in saving money on eligible dental and vision expenses. To qualify, employee should be signed up for a high-deductible wellbeing plan that meets IRS rules, and their costs should be qualified for repayment under the arrangement’s rules.
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