FSA “Use It or Lose It”: How to Spend Your Balance Before It Expires

If you have a health Flexible Spending Account (FSA) through work, the end of the year is the time to check your balance. Unlike an HSA, FSA money generally expires if you don't use it. Here is how the deadlines work and how to spend what's left wisely.

What is a health FSA?

A health FSA lets you set aside pre-tax money from your paycheck for medical expenses. Because contributions skip federal income tax and Social Security and Medicare taxes, every dollar you spend through an FSA is effectively a discount equal to your tax rate, often 20–30% or more.

Contribution limits

The "use it or lose it" rule and its exceptions

By default, money left in your FSA at the end of the plan year is forfeited. Employers may (but don't have to) offer one of these relief options:

• Carryover: roll over up to a set amount (see table) into next year.
• Grace period: up to 2½ extra months (often until March 15) to spend last year's money.

Plans can offer one or the other, or neither, but not both. Many plans also have a run-out period, a deadline to submit receipts for expenses you already incurred. Check your plan documents or benefits portal.

Smart ways to use your remaining balance

Book care you were going to get anyway

• Dental cleanings, fillings or other dental work
• Eye exams, prescription glasses, contact lenses
• Physical therapy, chiropractic care, hearing aids
• Refill prescriptions before year-end

Stock up on eligible everyday items

• Over-the-counter medicines (pain relievers, allergy and cold medicine)
• First-aid supplies, bandages, thermometers
• Sunscreen (SPF 15+, broad spectrum), menstrual care products
• Blood pressure monitors, reading glasses, contact solution

Don't buy things you won't use. Spending $200 on unnecessary items to "save" $50 in taxes is a loss.

How to choose next year's amount

1. Add up predictable costs: prescriptions, regular appointments, glasses, planned dental work.
2. Add a portion of your deductible if you usually meet it.
3. Be conservative. Choose an amount you're confident you'll spend, plus any carryover your plan allows.

Good news: with a health FSA, your full annual election is usually available on day one, even though you contribute through the year.

FSA or HSA?

If you're eligible for an HSA, it's usually the better long-term tool: no expiration, it's portable, and it can be invested. Some HSA users can also use a "limited-purpose" FSA for dental and vision. See HSA explained.

Dependent care FSAs are different

A dependent care FSA covers childcare and adult day care so you can work. It has separate limits and rules and doesn't carry over the same way. Check your plan's deadlines for it as well.

Sources: IRS; IRS tax year 2027 inflation adjustments.