Also offered through employers, these allow you to set aside money to pay for medical bills and for dependent care. Generally, you have to sign up by the end of the year to participate in the following year, though there are exceptions if your situation changes - if you have a baby next spring, for instance. A flexible spending plan allows you to pay qualifying bills with untaxed money, as contributions are subtracted from your taxable income. The money is withheld from your paycheck and put directly into the plan. After paying qualified bills, you submit vouchers for reimbursement.
Rules vary somewhat among employers.
Your benefits department should have details.