What type of expenses can a Flexible Spending Account (FSA) typically cover?

A Flexible Spending Account (FSA) is designed primarily to help individuals manage their healthcare costs by allowing them to set aside pre-tax dollars for qualified expenses. Typically, FSAs can cover a variety of medical expenses that are defined by the Internal Revenue Service (IRS) guidelines, including expenditures such as co-pays, deductibles for medical services, prescription drugs, and certain over-the-counter items that are health-related.

When considering the context of cafeteria plans, which allow employees to choose among various benefit options that suit their needs, the correct answer emphasizes that FSAs fall within this framework. The qualified expenses covered by an FSA are specifically articulated within the cafeteria plan, ensuring that only eligible medical expenses can be reimbursed.

This alignment underscores the importance of understanding the limitations and specifications surrounding FSAs, as they do not generally extend to personal expenses that aren't medically related, making them distinct from options like broad personal expenses or investment-related costs.