What is Health Care Flexible Spending Account (FSA)?

Health Care Flexible Spending Account (FSA) is a tax-advantaged financial account that allows employees to set aside pre-tax dollars to pay for eligible medical, dental, and vision expenses. These expenses may include deductibles, copayments, prescriptions, and certain medical supplies. The funds contributed to an FSA are deducted from an employee’s paycheck before taxes, reducing their taxable income, but the account is typically required to be used within the same calendar year, or the funds may be forfeited unless the employer offers a grace period or rollover option.