If you need to shelter more money for medical expenses, flexible spending accounts may be for you.
An FSA is an employer-sponsored plan that lets you set aside a portion of your wages on a pretax basis for medical expenses not paid for by insurance. The funds can even be used for doctor fees, co-payments and deductibles.
Also, FSAs can be used with high-deductible plans and traditional health insurance plans.
However, there's one red flag to note. Money in your FSA must be used during the plan year, though there's an annual grace period. So, if your firm also offers health savings accounts, or HSAs, which also shelter pretax wage contributions, though mainly for high-deductible plans, you'll come out ahead, says Rosen. Unfortunately, you can't sign up for both plans.
Even if your employer only offers an FSA, you could still save lots of dough on health insurance.