Limited Purpose/Post Deductible

The Limited Purpose or Post Deductible FSA deals with how the FSA is treated in conjunction with health savings accounts (HSAs) and health reimbursement arrangements (HRAs). The Limited Purpose FSA allows funds to be used only for qualified dental or vision expenses. The Post Deductible FSA allows funds to be used for qualified medical expenses as well, but only after the health plan statutory deductible is met. HSA funds must be spent first for medical care until the HSA statutory deductible is satisfied for medical expenses. Rules also apply regarding when the FSA funds can be used in conjunction with an HRA. The same expense cannot be reimbursed from an HSA, HRA and FSA. All expenses must be qualified medical, vision, pharmacy or dental benefit expenses as defined in Section 213(d) of the IRS Code.

Sterling offers Limited Purpose or Post Deductible FSAs as a stand-alone service when employers already have an HSA or HRA and cannot also have a Healthcare FSA, or in conjunction with a full-flex benefits package. We will work with the employer to coordinate the payment of claims from the HSA, HRA and FSA to comply with regulations.

If an employer adopts the Limited Purpose FSA mid-year, the existing General Purpose FSA will be terminated and the new Limited Purpose FSA will be opened and new plan documents will be produced. However any elections made by the participant may not be changed mid-year unless the employee experiences a qualifying event.