Flexible Spending Account (FSA)

A Flexible Spending Account (FSA) is a tax-advantaged financial account offered by employers that allows employees to set aside pre-tax dollars to pay for eligible out-of-pocket expenses, such as medical, dental, and vision care, or dependent care costs. FSAs reduce an employee’s taxable income, which can result in tax savings. Funds in an FSA are typically “use-it-or-lose-it,” meaning they must be used within the plan year or a grace period, or they will be forfeited, unless the employer offers a carryover option or extended grace period.