So why would anyone pay for their own health care expenses when insurance can do it instead? In short, the tax savings! In the case of FSAs and HSAs, you can elect to set aside your money through deductions from your paycheck before that money gets taxed.
Because the money is set aside before taxes ("pre-tax"), it ultimately lowers your overall taxable income. This means you pay less in taxes while also being able to use the funds pay for eligible health care services like copays or products like Band-Aids, that you would normally pay for out of your own pockets.
Consumer-directed health care is an idea that first emerged during the mid-20th century and has evolved over the last 50 years. To help you understand the power of these accounts, let's explore how these health care options came to be over the past several decades: