Limited Purpose Flexible Spending Account

A Limited Purpose Flexible Spending Account (FSA) is a tax-advantaged account designed to work with your Health Savings Account (HSA). It allows you to use pre-tax funds to pay for eligible dental and vision expenses, as well as medical expenses that exceed your deductible. This means the money you contribute reduces your taxable income, and the funds come out tax-free when you use them for eligible expenses.

Tax advantages described here are for federal income tax purposes only. State income tax treatment of contributions and earnings may vary. Check with your tax advisor for more information.

• Eligibility

  You are eligible for a Limited Purpose FSA if you are enrolled in the Enhanced HDHP or Basic HDHP medical plans and you also elect to enroll in the HSA.

  • The IRS rule: Federal law prohibits you from having a "General Purpose" Health Care FSA if you are contributing to an HSA.

  • The solution: The Limited Purpose FSA is "HSA-compatible" because it restricts what you can spend the money on. This allows you to reap the tax benefits of an FSA while still growing your HSA balance.

• How it works

  The Limited Purpose FSA is a companion to your HSA. It allows you to save pre-tax money specifically for dental and vision costs so you can let your HSA balance grow for future medical needs.

  
  

  Contribute

  During Open Enrollment, you elect your annual contribution amount.

  • 2026 Maximum Contribution: $3,400
  • Deductions: This amount is deducted from your paycheck in equal pre-tax installments.
  • Changes: You can only change your contribution amount during the year if you experience a qualifying life event.

  
  

  Pay

  Use your Fidelity debit card to pay for:

  • Dental and vision: Eligible expenses (like glasses, braces, or dental cleanings) are covered from day 1.
  • Post-deductible medical: You can only use the LPFSA for general medical expenses (like doctor copays or prescriptions) after you have met your annual medical plan deductible.
    
    

    Important: Keep all itemized receipts and Explanation of Benefits (EOBs). The IRS requires these to verify that the expense was for dental/vision or incurred after your deductible was met.

  
  

  Spend (The "use-it-or-lose-it" rule)

  The LPFSA has strict IRS deadlines. You must incur (receive the service) and submit your claims by the dates below, or you will forfeit the remaining funds.

  Plan year	Deadline to incur expenses	Deadline to submit claims
  2025 Balances	March 15, 2026	March 31, 2026
  2026 Balances	March 15, 2027	March 31, 2027

  Termination rule: If you leave Iron Mountain and do not continue your FSA through COBRA, you must incur all expenses prior to your termination date, though you still have until March 31st of the following year to submit those claims.

  
  

  Learn more

  • Eligible Expenses: For a full list of eligible expenses, view IRS Publication 502.
  • Legal Requirements: To review the legal requirements governing health FSAs, see IRS Publication 969.

For more information, contact Fidelity at 833-299-5089.