A limited-purpose FSA is a health flexible spending arrangement offered through an employer that only reimburses a narrow set of expenses, mainly dental and vision care (plus items such as preventive care), instead of general medical costs. You fund it with pre-tax salary reductions, just like a regular health FSA.
Its main purpose is to work alongside a health savings account (HSA). The IRS says that being covered by a regular health FSA generally disqualifies you from contributing to an HSA, but a limited-purpose health FSA does not, so you can keep making HSA contributions while covered by a high-deductible health plan and still use pre-tax FSA money for dental and vision bills. Health FSA salary reductions were capped at $3,300 for 2025 (IRS Publication 969).
Source: IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
Image: An eye examination during Pacific Partnership 2022, U.S. Navy photo by Petty Officer 2nd Class Brandie Nuzzi, public domain, via Wikimedia Commons.