Are you an employer looking to help your workers save money on health costs? BenefitsDNA can help you set up a Limited Purpose Flexible Spending Account (LPFSA) for your team.
What is an LPFSA?
An LPFSA is a special savings account for health costs. It lets your employees set aside money from their paycheck before taxes are taken out. This money can be used for dental and vision expenses.
FSA vs. LPFSA: What’s the Difference?
You might have heard of a regular Flexible Spending Account (FSA). Here’s how an LPFSA is different:
- What they cover:
- FSA: Can be used for a wide range of medical expenses, including doctor visits, prescriptions, and hospital stays.
- LPFSA: Only covers dental and vision expenses.
- Who can have them:
- FSA: Most employees can have an FSA.
- LPFSA: Usually only for employees who also have a Health Savings Account (HSA).
- Using with other accounts:
- FSA: Generally can’t be used with an HSA.
- LPFSA: Can be used alongside an HSA, giving employees more savings options.
- Contribution limits:
- Both have yearly limits, but they might be different. We can help you understand the current limits.
- Rollover rules:
- Both FSAs and LPFSAs usually have “use it or lose it” rules, but some plans allow a small amount to roll over to the next year.
In short, an LPFSA is more focused but can work well with other savings accounts. It’s a great choice for employees who want to save on dental and vision costs while also using an HSA for other medical expenses.
How We Help
Our team makes it easy to set up and manage an LPFSA for your business. Here’s what we do:
- Explain how LPFSAs work
- Help you choose the right plan for your company
- Set up the account and handle all the paperwork
- Train your team on how to use the LPFSA
- Provide ongoing support for any questions
Benefits for Your Business
Offering a Limited Purpose Flexible Spending Account (LPFSA) can bring several advantages to your company:
- Happier, Healthier Employees
- Workers save money on dental and vision costs, which means they’re more likely to get the care they need.
- When employees can afford regular check-ups and necessary treatments, they tend to be healthier overall.
- Healthier employees often miss less work and are more productive when they’re at work.
- Financial stress can affect job performance. By helping employees save money, you’re reducing this stress.
- Employees who feel valued and cared for are more likely to stay with your company longer.
- Lower Taxes for Your Business
- When employees contribute to an LPFSA, it reduces your company’s taxable payroll.
- This means you may pay less in Social Security and Medicare taxes (also called FICA taxes).
- For example, if an employee puts $1,000 in their LPFSA, your company could save about $76.50 in FICA taxes.
- These savings can add up, especially if many employees participate in the LPFSA.
- You might be able to use these tax savings to invest back into your business or offer other benefits.
- Stand Out in the Job Market
- Not all companies offer LPFSAs, so having one can make your benefits package more attractive.
- When you’re trying to hire new employees, a strong benefits package can help you attract top talent.
- Offering an LPFSA shows that you care about your employees’ health and financial well-being.
- It can be especially appealing to employees who wear glasses or contacts, or those who know they’ll need dental work.
- Having unique benefits like an LPFSA can help build a positive reputation for your company as a great place to work.
Benefits for Your Employees
- Save money: Pay less in taxes by using pre-tax dollars for health expenses
- Easy to use: Simple straightforward way to pay for dental and vision costs
- Plan ahead: Set aside money for future health needs
Why Choose BenefitsDNA?
We’re experts in employee benefits. We speak plain English, not confusing jargon. Our team is here to make your job easier and your employees happier.
Ready to learn more? Contact us today for a free consultation!