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Getting Started with Individual LPFSAs in Zenefits



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.


When can I set up an LPFSA?


You have four potential opportunities to enroll in a new LPFSA or Child & Elderly Care FSA:

  • After your company sets up a new plan (initial enrollment)
  • When your company renews its existing plan (open enrollment)
  • As a new hire
  • When you experience a qualifying life event

What's the deadline for setting up my LPFSA?

  • Once the company plan is set up, individual workers will need to complete enrollment by the 25th to start on the 1st of the next month. Anyone who misses the deadline will not be able to enroll until the next renewal, unless they have a qualifying life event.
  • Keep in mind that enrollees won't be able use the LPFSA funds until after their plans start, or get reimbursed for purchases made prior to the start of their plans.

Can I set up an LPFSA after a birth, death, marriage, etc?

  • Yes! You'll have 30 days from the birth of a child, a death of a family member, or another qualifying life event (QLE) on this list to set up a new LPFSA. When you do, the plan will have a retroactive start date of the first of the month in which the event occurred.
  • Keep in mind that if you're expecting a newborn, you need to wait until after the child is born to set up the account. Learn more.


Which type of LPFSA should I choose?


Health Care (Limited/Full) and Child & Elderly Care FSAs both provide you with the same tax advantages, but they follow different rules for what they'll pay for, when you can use them, and which additional requirements (if any) you'll need to satisfy in order to use them. Here's how to choose the FSA type that's right for you.

Should I set up a Health Care or Child & Elderly Care FSA?

The right choice depends on what kinds of expenses you have:
  • Choose a Health Care FSA to pay for out-of-pocket health care expenses (e.g., doctor copays, prescriptions, deductible expenses, and other FSA eligible expenses) for you, your spouse, or your dependents.
  • Choose a Limited Purpose FSA if you are enrolled in a HDHP with HSA to pay for out-of-pocket dental and vision expenses (e.g., eyeglasses, orthodontics) for you, your spouse, or your dependents.
  • Choose a Child & Elderly Care FSA to pay for the care of a child or other dependent (e.g., an aging parent) so that you (and your spouse, if you have one) can work or look for work.

Can I have both types of accounts?

Sure! If you have both health care and child/elder care expenses, you can contribute to both a Health Care and Child & Elderly FSA. During setup, you'll be able to choose separate amounts for each type. However, you can't transfer funds between the two accounts.


How much should I contribute to my LPFSA?


During setup for your individual LPFSA in Zenefits, enter a single annual contribution amount for either a LPFSA or Child & Elderly Care account to set up only one type of account, or separate amounts for each type to set up both types of accounts. Here are tips on choosing the right contributions for either or both types.

How much can I contribute to a LPFSA?

For the latest contribution limits allowed by IRS, please check this Help Center article.

How do I choose the contribution amounts that are right for me?

LPFSAs let you plan ahead for your out-of-pocket expenses, so the right contribution amount for either FSA type will ultimately depend on how much you expect to spend on eligible expenses.


Here are a few things to consider:

  • If you contribute more, you may increase your tax savings. You can maximize your tax savings if you contribute more. Learn more.
  • Your company may choose to contribute to your LPFSA( s ). If so, you'll be able to see the amount(s) when you set up your plan. Company contributions count towards your annual maximum limit for a Child & Elderly Care FSA, but not towards the limit for a Health Care FSA.
  • LPFSAs are "use it or lose it" accounts. Any funds you don't spend by the end of the plan year (or when your employment ends) go back to your employer, so don't contribute more than you're sure you will spend.
  • Contribution amounts can't be changed. Once the plan starts, you can only change your contribution amount(s) after a birth, death, change in marital status, or other qualifying life event.


What happens after I set up my LPFSA?


When you complete setup for a new LPFSA and/or Child & Elderly Care FSA, Zenefits will process the application, email you to let you know you're all set, and confirm your plan's start date. Here are some tips to help you prepare for the start of your plans.

When will I receive my Zenefits Card?

  • If you don't already have a Zenefits Card, you'll receive one in the mail within 10-15 days.


When can I start using my LPFSA funds?

  • You'll be able to start using your LPFSA and/or Child & Elderly Care FSA funds on the day your plan starts.
  • You can start using your LPFSA on the first day of the plan. The entire annual contribution amount (including employer contributions, if any) is available on that date, and is repaid incrementally through deductions from your paychecks over the remainder of the plan year. However, you can't use your LPFSA to pay for expenses that occurred prior to the start of your LPFSA.


How can I use my LPFSA?

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