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Flexible Spending Account

Meaning

A Flexible Spending Account (FSA) is an employer-sponsored, tax-advantaged financial account that allows employees to set aside pre-tax income to pay for qualified out-of-pocket medical, dental, and vision expenses. This arrangement provides a significant tax benefit by reducing the employee’s taxable income, making essential healthcare costs more manageable. FSA funds can be used for a broad spectrum of expenses, including co-payments, deductibles, prescription medications, and certain approved over-the-counter health products. It is a key mechanism for healthcare budgeting, particularly for planned annual expenditures like specialty hormonal therapy protocols.