Out-of-pocket health care costs add up fast: from copayments and deductibles to prescription drugs, supplies, and testing devices. If you're enrolled in a health plan offered by your employer, you might be able to lower some of those costs by setting aside tax-free money to help pay for those expenses. We're talking about a Flexible Spending Account, or FSA. You can use FSA funds to pay for qualified medical expenses for yourself, your spouse, and any dependents. Many health-related items and services may qualify, from acupuncture and bandages to vision correction surgery and X-rays. FSA money can be used to pay for copayments, coinsurance, and deductibles, but NOT for health insurance premiums. Check with your FSA administrator to verify which expenses qualify. When you set up an FSA, you decide how much to put toward your health care expenses. That amount is taken out of your paycheck each pay period, before taxes are deducted, and deposited into your FSA. That means you save whatever percentage you would have paid in taxes on that money. There is a limit to how much you can contribute to your FSA per year, per employer. And FSA funds are typically "use it or lose it," meaning you give up the money you contribute if you don't spend all of it by the end of your plan year. When you're deciding how much to contribute, plan ahead and estimate how much you'll spend during the year. If you contribute too much, you may end up losing some of your own money. Would an FSA be a good choice for you?

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