A flexible spending account (FSA) is a tax-advantaged employee savings account established by your employer. The FSA allows employees to set aside a portion of their pay, pretax, through payroll deduction for qualified expenses, usually healthcare expenses. FSAs save you money by reducing your income taxes. The funds set aside in your FSA are taken from your pay before your federal, state, or social security taxes are calculated and are not reported to the IRS. This reduces your taxable income and increases the amount you are able to retain from your paycheck. An FSA can save you hundreds to thousands of dollars each year depending on how often you pay for the approved healthcare expenses. Speak with your employer to find out whether your company offers an FSA and to learn the features of your particular plan.

What can I purchase with my FSA?
Many high-value healthcare purchases are allowed with FSA funds. Among eligible high-value purchases are healthcare deductibles, co-payments, dental and vision expenses, blood pressure monitors, blood glucose monitors, and OTC drugs. Drugs that have moved from prescription-only to OTC are particularly popular purchases. These include drugs and heartburn medication and treatments such as Prilosec OTC.