Limited Purpose Flexible Spending Arrangement (LPFSA)

If we have an HDHP and an HSA, we can also have an LPFSA. But if we have just an FSA, we can’t have an HSA at the same time, which means no LPFSA, so we should check with our HCP so we can IDK and LOL.

Man, sometimes trying to understand health insurance coverage is like trying to leave an IKEA: it’s confusing, it’s exhausting, and at times, it can feel like a lost cause. But before we just curl up in a corner and admit defeat, let’s break down this LPFSA thing into terms we can all understand.

An HDHP is a high-deductible health plan, which means it has a higher deductible and lower premiums than your average ordinary health plan. If we’ve got one of those, we might also be able to open an HSA, which is a health savings account. The money we put in there (or actually, money from our salary that our employer puts in there on our behalf) is tax-exempt, and can be used for additional medical expenses our insurance doesn’t cover. Or, if we never use it, it can become part of our retirement savings. Now, if we have both an HDHP and an HSA, we can also open an LPFSA, or Limited Purpose Flexible Spending Arrangement. The money we put in there is also tax-exempt, and it’s used to cover dental and vision-related expenses that our insurance doesn’t cover.

Not so hard to understand after all, was it? Now if only we could find our way out of this IKEA.