FSAs provide the opportunity to have a pre-tax Flexible Spending Account (FSA) — governed by Section 125 of the IRS Code — that lets you pay for your medical expenses using pre-tax money. You decide the amount of money to deduct from your paycheck BEFORE taxes. This pre-tax money is put into a Flexible Spending Account (FSA) to be used to pay for medical expenses, such as doctor and prescription copays, eligible over the counter medications and other medical expenses not covered by your insurance plan. You are funding your FSA account using pre-tax money, which reduces your gross taxable income, thus reducing your state, federal and FICA taxes. Since you are using your FSA pre-tax money to pay for your medical expenses, your net spendable income is increased — like giving yourself a raise.