Flexible spending account
A workplace account that lets you set aside pre-tax pay for medical costs (or dependent care), usually lost if you don't spend it in the plan year.
You choose an amount during open enrollment and it comes out of each paycheck before tax. For a health FSA, the full yearly amount is available from the start of the plan year.
Money left at year end is generally lost. A plan may let you carry over a limited amount or give you up to 2½ extra months to spend it, but not both. A dependent care FSA is a separate account for child care or adult dependent care.
Example
Setting aside $1,200 for glasses and prescriptions in the 12% bracket saves $1,200 × 12% = $144 in income tax, plus $92 in Social Security and Medicare tax.