A Flexible Spending Account, or an FSA, is an account you can allocate pre-tax money to throughout the year. You can use funds in this account to pay for approved out-of-pocket medical costs. You’ll choose how much money you want to allocate to your FSA, and it’ll build throughout the year. When you visit a doctor’s office or need to pay for a dentist visit, you can use your FSA card!

A Health Care Flexible Spending Account is designed to take advantage of Section 125 of the IRS tax code. It allows you to pay certain qualified expenses on a pre-tax basis, thereby reducing your taxable income. You determine the amount of money per plan year to put into your account. The funds in the account can be used to pay for eligible medical expenses like deductibles, co-payments, prescription drugs, and other expenses not covered by your health insurance plan like dental or vision expenses.

A dependent care FSA can be used to help pay for costly dependent care services, such as daycare for your child or adult daycare for a senior citizen. It should be noted that funds not used by the end of the plan year are lost to the employee, known as the “use it or lose it” rule.