An arrangement you set up through your employer to pay for many of your out-of-pocket medical expenses with tax-free dollars. You decide how much of your pre-tax wages you want taken out of your paycheck and put into an FSA. You don’t have to pay taxes on this money. Your employer’s plan sets a limit on the amount you can put into an FSA each year. You are typically required to spend all of the money in the account within the calendar year, some plans may have exceptions to that rule.
Expenses that may be paid for with your FSA include:
- qualified prescription drugs
- qualified medical expenses