The health care and dependent care spending accounts are designed for one purpose: to help you save on taxes.  Your taxable income is reduced by the amount you contribute to the accounts.

How much can you save on taxes? Take the amount you will contribute to the dependent care and health care spending accounts times your federal tax percentage bracket to determine how much federal taxes you save.  You may also save on Social Security and Medicare taxes – and depending on where you live, state and local taxes.

Your participation in the flexible spending accounts may reduce your Social Security retirement benefits.  But the current tax advantages generally offset any reduction in Social Security benefits.