Dependent Care FSA vs Limited Purpose FSA
Last updated July 2026
Dependent Care FSA (DCFSA)
Pre-tax dollars for qualifying dependent care expenses
Advantages
- $5,000 annual limit for single or married filing jointly (2026)
- Covers daycare, preschool, after-school care for children under 13
- Also covers elder care for a qualifying dependent
- Significant tax savings for families paying for childcare
- Reduces taxable income by contribution amount
Drawbacks
- Use it or lose it, no meaningful rollover
- $5,000 combined limit if married (both spouses combined)
- Married filing separately capped at $2,500
- Only covers care that enables you (and spouse) to work
- Cannot be combined with the federal Child and Dependent Care Tax Credit for the same expenses
Limited Purpose FSA (LPFSA)
HSA-compatible FSA restricted to dental and vision expenses
Advantages
- Can be used alongside an HSA (unlike standard FSA)
- Pre-tax dollars for dental and vision expenses
- $3,300 annual limit (2026)
- Preserves HSA balance for investment and long-term growth
- Employer may add contribution above employee election
Drawbacks
- Restricted to dental and vision only (not general medical)
- Use it or lose it, most funds expire at year end
- Not portable, lost when you leave employer
- Only available if your employer offers it
Dependent Care FSA and Limited Purpose FSA both play in tax-advantaged health accounts, but they're aimed at different buyers. Dependent Care FSA is built for working parents paying for childcare or dependent care. Limited Purpose FSA is built for hSA holders who want pre-tax funding for dental and vision without depleting HSA balance. Which one fits depends on which of those descriptions sounds more like you.
Feature Comparison
| Feature | Dependent Care FSA (DCFSA) | Limited Purpose FSA (LPFSA) |
|---|---|---|
| Annual Contribution Limit | $5,000 individual or married filing jointly (2026) | $3,300 individual (2026) |
| Eligible Expenses | Daycare, preschool, after-school, elder care | Dental and vision expenses only |
| Rollover Rules | None (some employers offer grace period) | $640 carryover OR 2.5-month grace period |
| Account Ownership | Employer-owned; lost when you leave | Employer-owned; lost when you leave |
| Combinable With Other Accounts | Yes, with health FSA (they cover different expenses) | Yes, specifically designed to work with an HSA |
| Tax Advantage | Pre-tax contributions reduce taxable income | Pre-tax contributions |
| Eligibility | Available with most employer benefit plans | Requires employer to offer LPFSA option |
| Withdrawal Rules | Reimbursement claims for qualified dependent care | Reimbursement claims for dental and vision only |
Too Close to Call
Dependent Care FSA and Limited Purpose FSA land roughly even overall; the right pick depends on which of their strengths matters more to you.
Dependent Care FSA's standout strength: $5,000 annual limit for single or married filing jointly (2026). Limited Purpose FSA's standout strength: Can be used alongside an HSA (unlike standard FSA). Neither dominates across the board, and both have well-known weak spots. Dependent Care FSA's biggest drawback: Use it or lose it, no meaningful rollover. Limited Purpose FSA's biggest drawback: Restricted to dental and vision only (not general medical). Pick the one whose strengths line up with what you actually need.
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