A Limited Purpose FSA (LPFSA) is an additional tax-free account for employees enrolled in the Consumer Choice HSA healthcare plan. A Limited Purpose FSA can only be used to reimburse eligible dental and vision expenses. For 2021, you may contribute up to $2,750 annually.
Why participate in an LPFSA? Your HSA contributions are limited to a certain amount each year. When you add an LP-FSA for dental and vision expenses, you can make additional pre-tax contributions, thus reducing your taxable income. However, like a normal FSA, an LPFSA is a “use it or lose it” account (with grace period), so plan carefully.