Sometimes called Flexible Spending Arrangements, FSAs are an arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars. Allowed expenses include insurance co-payments and deductibles, qualified prescription drugs, insulin, and medical devices.
You decide how much to put in an FSA, up to a limit set by your employer. You aren't taxed on this money.
Also see - Health Savings Accounts (HSAs) - similar arrangements for people with coverage they bought themselves (not job-based plans).