What is the purpose of a Flexible Savings Account (FSA)?

A Flexible Savings Account (FSA) is specifically designed to allow individuals to use pre-tax dollars to pay for eligible medical expenses. This includes costs such as co-pays, prescriptions, and other out-of-pocket healthcare expenses that may not be covered by health insurance. By using pre-tax dollars, participants can lower their taxable income, effectively reducing their tax liability. This makes FSAs a valuable financial tool for managing healthcare costs.

The other choices are not aligned with the purpose of an FSA: investing for retirement pertains to retirement accounts like 401(k)s or IRAs, saving for education expenses relates to accounts like 529 plans or Coverdell Education Savings Accounts, and accumulating cash value over time is characteristic of certain life insurance policies or investment accounts, but it's not a feature of FSAs. Therefore, option C accurately reflects the main function of FSAs in managing medical expenses efficiently.