Flexible Spending Account (FSA)

An account set up through your employer that you can use to pay for certain out-of-pocket medical costs with tax-free dollars. You decide how much money to put in your FSA, up to a limit set by your employer. Your employer also can put money in the account. You don’t pay taxes on this money. You can use your FSA to pay for health care costs, such as insurance copays and deductibles.