A flexible spending account is a fairly straightforward way to set aside money for healthcare expenses. However, things get a bit more complicated when you consider that there are different types of FSA accounts for different situations. Here’s what you should know about a limited expense FSA.
You might know by now that an FSA enables you to set aside pre-tax dollars for your medical expenses. With a limited expense FSA, however, the rules are a bit different. In particular, limited expense FSA accounts only allow you to use your funds for the purposes of vision and dental healthcare. Medical products, tools, and services which fall into this category are eligible, and you can use your FSA for you, your spouse and your dependents.
Since a limited expense FSA only covers certain things in the area of vision and dental, it’s important to keep documentation of everything that you’d like to be reimbursed for. Receipts, canceled checks, and balance statements do not count as documentation, unfortunately. That’s why you’ll need to keep track of detailed receipts and medical necessity letters, signed by your doctor.
A prescription from your doctor, in addition to a detailed receipt, can also help you claim reimbursements.
Aside from vision and dental services that you might think of — like glasses, contacts, and braces — limited FSAs can also cover more nuanced needs. For example, someone with special vision needs could use this type of FSA to cover their seeing eye dog, including care, training, and maintenance of the animal. This type of account also covers dental x-ray fees, braille books, teething pain products for babies and more.
You might be wondering if you can have a limited expense FSA and an HSA at the same time. The answer is yes, you can have both of these accounts. In fact, having an HSA to supplement additional healthcare expenses is a good idea, since a limited expense FSA is only going to cover you for certain purposes regarding vision and dental care. An FSA doesn’t cover or reimburse prescription drugs, so you’ll want to ensure that you have an HSA or other types of healthcare to pay for medicine that you or your family may need.
You may have heard that the max flexible spending contribution rules have changed for 2019. This is true, but it’s also true that the maximum amount an employee can pay is set by the employer. This is as long as it doesn’t exceed the IRS rule, which has moved up an additional $50 from $2,650 to $2,700 in a given year.