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Earlier this year, my company introduced a new perk to the employees — Flexible Spending Accounts (FSAs).

If you're not familiar with FSAs, here's a brief description from Wikipedia:

A flexible spending account (FSA) is a tax-advantaged financial account set up through the cafeteria plan of an employer in the United States. An FSA allows an employee to set aside a portion of his or her earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses but often for dependent care or other expenses. Money deducted from an employee's pay into an FSA is not subject to payroll taxes, resulting in a substantial payroll tax savings.

When the plan was first announced, it didn't sound like a great deal. Cut my pay every week, add it to an account earmarked for healthcare-related bills, and lose it if I don't use it?

No thanks.

But I signed up anyway. And it's been great.

I'm spending the same amount of money on health-related items, but saving money in the process, since the FSA money is removed before taxes.

The reasons that this works so well is thatwe keep a budget, so it's easy to figure out how much we spend on prescriptions, co-pays and over the counter meds over the year. We budgeted $400 for the year for the FSA, which comes out to about $16 every paycheck.

We were even a bit conservative on the amount to set aside for the FSA, but it's all good — any saving is worth doing.

The only downside to the FSA is the need to pay for every FSA-eligible item separately from other purchases. It's not a huge deal, and because we have an FSA debit card, we don't need to submit all of our receipts to get our money back.

The IRS does regulate it pretty tightly, so we've gotten a couple of "unsubstantiated" claims for co-pays at the doctor that require faxing some sort of documentation to confirm our debit card purchases are real FSA-eligible items.

If your employer offers an FSA and you're not participating in it, you're missing out on a great savings opportunity.

If your employer doesn't offer an FSA, a Health Savings Account (HSA) might be right for you. (There are some limitation on having both an FSA and an HSA, so check with your provider to make sure everything is square.)