It works incredibly well for my family. We can put $3,200 in the FSA next year and not get taxed on it as well as spend the money tax free. You can buy cold medicine, advil, go to the dentist, go to the doctor, etc.

I've only been at two jobs that offered an FSA but both had resources explaining clearly that it is use it or lose it. And my personal risk aversion is why I chose an HSA instead. But it seems like a good idea for people to be able to save money by saying "This isn't really income, since I am confident it's only going to a demonstratable health expense. So don't tax me on it." It's like a business expense can be tax deductible, and you are in the business of living. But then you don't get to take home extra money for being under budget. When used correctly, it's a tool to drive down living expenses and is more efficient for lower incomes since it uses a flat max annual deduction.

I don't want to victim blame people that lose money by overcommitting, but it's not like this is in fine print. You can get short articles that explain it in simple terms just by googling "fsa" before committing thousands of dollars to something. If you don't have much idea what your minimum spending on healthcare will be, just keep it as income for full freedom or use a different tax-advantaged option. It's just meant to be an option for people with good awareness of budgetting to save some money.

It’s not even necessarily by calendar year, as Breunig and many others find out the hard way.