What is a Flexible Spending Account (FSA) commonly used for?

A Flexible Spending Account (FSA) is designed to allow employees to set aside a portion of their earnings before taxes to be used for specific out-of-pocket health expenses. The primary use of an FSA is to cover qualified medical expenses, such as copayments, medications, and other healthcare-related costs that are not fully covered by insurance. This pre-tax contribution reduces taxable income, ultimately providing tax savings for the employee.

The correct understanding of FSAs highlights their role in managing healthcare costs and supporting employees in effectively budgeting for necessary medical expenditures. The other options do not align with the established purpose of an FSA; they refer to expenses or investment strategies unrelated to the specific healthcare spending focus of an FSA.