Understanding Limited Purpose FSAs

Limited Purpose FSA Save on vision & dental expenses Many employers offer this benefit to help you set aside pre- tax funds for you and your family’s healthcare. Contributing to Contribution limits1 both a Health Savings Account (HSA) and a Limited Purpose LPFSA: $3,300 Flexible Spending Account (LPFSA) takes your savings to the next level⸀਀ HSA: $4,150 (individuals) Sometimes referred to as the “HSA-Compatible FSA,” an $8,300 (families) LPFSA is a tax-advantaged account you can use to pay for eligible vision and dental services. Unlike with a Medical FSA, you can contribute pre-tax dollars to both an LPFSA and an HSA in the same plan year. How it works The funds are deducted directly from your payroll, and you can save up to 35%2 on vision and dental expenses when you pay with them. Used alongside your High-Deductible Health Plan (HDHP) and HSA, it’s a smart and convenient way to take care of your health and finances. Employee Eligibility Enrollment Timeframe Eligible Expenses If you are eligible for your You can only enroll and set your Use your LPFSA to pay for employer’s benefits program, annual election amount during eligible vision and dental you are eligible to enroll in an your employer’s open expenses such as dental FSA. You will need to re- enrollment, or on account of a procedures, teeth cleanings, enroll each year. qualifying life event. vision exams, prescription glasses. “ Election amount㨀਀ Don’t default to contributing the maximum amount. Take time to assess how much you spent last year and anticipate what you might need this coming year਀㠀 use it or Grace period & carryover㨀਀ Check if your employer offers one of these options to allow you lose it? to incur expenses up to 2.5 months after the plan year ends or “You may have heard this carry up to $640 into the new plan year਀㠀 about the FSA. While the Run-out period㨀਀ funds do eventually expire, Not to be confused with the “grace period,” your employer may don’t let it deter you from also offer this time for you to submit claims for expenses after enrolling! Here are some the plan year ends, for expenses incurred during the plan year. pro tips: Knowing these plan options and key dates will make it easier to get the most out of your FSA, and ensure you are not left with forfeited dollars. livelyme.com | 1.888.576.4837 | support@livelyme.com

LPFSA + HSA The LPSFA and the HSA uniquely complement each other because one is a short-term spending account and the other is a long-term saving account. By enrolling in both simultaneously, you have the opportunity to maximize HSA contributions while reducing out-of-pocket expenses by paying with LPFSA funds. No other healthcare accounts can be paired like this. Vision & Dental HSA-Compatible TAX LPFSAs are a specific type of FSA While you can have an LPFSA that can be used to pay for eligible without also having an HSA, the vision and dental expenses with pre- LPFSA is specifically designed to tax dollars. Check the full list at pair with an HSA so you can save livelyme.com/whats-eligible. and spend tax-free in parallel. FSA Rules Apply Converts to FSA Like Medical FSAs, LPFSAs are Once the health plan deductible employer-owned accounts and has been met, the LPFSA converts funds expire at the end of the plan to a Medical FSA and can be used year. Funds are elected annually for other eligible expenses in and available on day 1 of the plan. addition to vision and dental.* “When should I enroll in an LPFSA?” The rule of thumb is to only enroll in an LPFSA if you also plan to contribute the annual maximum to your HSA in the same tax year. By paying for eligible vision and dental expenses with LPFSA funds first, you give your HSA funds a chance to grow. “What if I have more questions?” Your employer’s benefits plan documents should serve as the source of truth. You can also visit livelyme.com/blog or contact Lively Support to learn more about using your healthcare accounts. [1] Annual contribution limits are set by the IRS each year. Contributions may vary by employer. Refer to your plan documents for additional considerations, such as catch-up contributions (55+) and employer contributions or matching⸀਀ [2] Assuming combined state and federal income taxes of 35% of more. ਀ [3] This may vary by employer. Refer to your plan documents for comprehensive details⸀਀ The content presented in this document are for informational purposes only, and is not, and must not be considered investment, legal, accounting, or financial planning advice, nor a recommendation as to a specific course of action. livelyme.com | 1.888.576.4837 | support@livelyme.com