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FSA (Flexible Spending Account)

You can put money in an FSA on a pretax basis to cover medical expenses not covered by your insurance, such as copays and contact lenses, as well as child- care expenses. The downside is that any money you don’t use on qualified expenses is lost, so you have to estimate carefully what you think your health- care expenses will be throughout the year— and then make sure to use it all up before the year is out so you don’t forfeit your tax break. (See also: Health Savings Account)

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