Flexible Spending Account (FSA) With an FSA, money (in the amount you choose) is taken out of your paycheck before taxes and put into an account.  The money in this account can be used to pay for medical expenses throughout the year and can be used in conjunction with any health insurance plan. The most important aspect of FSAs is that they have a “use it or lose it” provision.  You must use the funds in the account in the year in which those funds were saved or you will lose them at the end of the year when they are returned to your employer.