Is an LPFSA right for me?
Here are the key features of flexible spending accounts (FSAs) that you should know. They'll help you decide if setting up an FSA is the right decision for your needs.
What is an FSA?
- A flexible spending account (FSA) allows eligible employees to set aside pre-tax money via payroll deductions into a tax-free account and use this money to pay for eligible health care expenses. Zenefits offers two types of FSAs:
- Health Care FSAs pay for out-of-pocket health care expenses (e.g., doctor copays, prescriptions, deductible expenses, and other FSA Eligible Expenses) not covered by insurance. There are 2 types:
1. Full Purpose Health Care FSA
2. Limited Purpose Health Care FSA (Dental/Vision only) - Child & Elderly Care FSAs pay for the care of a dependent child or adult so that employees can work or look for work (Learn More).
- Employees can enroll in one or both types simultaneously in Zenefits. See this page for a comparison of the primary differences between Health Care and Child & Elderly Care FSAs. The only eligibility requirement for FSA is that the employee is offered benefits. They do not have to enroll in benefits, but the company just needs to offer medical benefits to the employee.
Why should I set up an LPFSA?
- LPFSAs let you set aside some of what you earn each year into an account that's specifically for out-of-pocket dental and vision expenses, without paying taxes on those dollars or having to use your HSA funds. If you have recurring care expenses (e.g., Eyeglasses, Dental work, etc.), or simply a rough estimate of how much you expect to spend on them, an LPFSA will help you save money.
Am I eligible for an LPFSA?
- If your company offers High Deductible health insurance with an HSA and you are eligible to enroll in one of their plans, you are eligible to enroll in a LPFSA. You do not need to be enrolled in health insurance through your company, you simply need to be eligible to be offered insurance. Though there are exceptions, self-employed employees and shareholders who own 2% or more in an S-Corp, LLC, LLP, PC, sole proprietorship, or partnerships are generally ineligible for LPFSAs.
- If you already have a health savings account (HSA), or intend to sign up for one, you can only enroll in a Limited Purpose FSA and Child & Elderly Care FSA. You may not be enrolled in an HSA and a full purpose Health Care FSA at the same time.
- If you already have a health savings account (HSA), or intend to sign up for one, you can only enroll in a LPFSA and Child & Elderly Care FSA. You may not be enrolled in an HSA and a full purpose Health Care FSA at the same time.
How much does an FSA cost?
- As an employee, the only cost to you is the amount you contribute to your LPFSA. Your company will pay all setup and account fees.