The money you contribute to your flexible spending account is taken out of your paycheck before taxes are taken out. In effect, you lower your taxable income for tax savings. The 'pre-tax funds' in your FSA or HSA allow you to pay for qualifying healthcare expenses that are not covered by your health plan, such as doctor visit co-pays, prescriptions, dental expenses, and more!
FSA Cost Savings Comparison Example
Goodnites Brand MSRP: $10
FSA Potential Tax Savings: $3