With a health care FSA, your employer takes money out of your paycheck before federal taxes. Then you draw on the funds during the plan year to pay for eligible expenses. FSA funds can't be carried over to the next year. If you leave your current employer, you can't take the money with you – but you do have a "window" when you can file claims for expenses you had before you left the employer.

You can spend FSA money on items approved by your employer and the IRS. The list usually includes:

• Doctor's office visits
• Dental services
• Eye exams, eyeglasses, contact lenses and solution, and laser surgery
• Hearing aids
• Orthodontia, dental cleanings, and fillings
• Prescription drugs and some over-the-counter items
• Physical therapy, speech therapy, and chiropractic expenses

Your employer's list may include other items on the IRS list of medical expenses.

FSA advantages
An FSA helps you plan for health care expenses while also saving you money.

• It saves you money on taxes. When you use tax-free dollars to pay for items and services you'd normally pay out-of-pocket, it's like you're getting a discount.
• Your entire FSA is available immediately. You have access to the full annual amount of your health care FSA on the first day of the plan year.
• It isn't tied to a certain kind of plan. The FSA can cover out-of-pocket costs associated with any kind of health plan – not just one with a high deductible. You can even sign up for an FSA if you opt out of your employer's health plan.
• It's easy to use. With many FSAs, you can use a special debit card to pay directly from your account. Just be sure to save your receipt in case you need to verify an expense.