Flex Spending Accounts do not roll over — you lose money you don't spend

A Flexible Spending Account (FSA) operates under a "use-it-or-lose-it" rule. Any money left in your account at the end of the plan year does not carry forward to the next year. The unspent balance goes back to your employer, and you cannot get it back. This is a federal rule that applies to almost all FSAs, regardless of which employer or plan administrator manages your account.

The only exception is a grace period, which some employers offer. If your plan includes one, you get an extra 2.5 months after the plan year ends to spend remaining money. Not all employers offer this, so you need to check your plan documents to know whether yours does. Even with a grace period, any money still unspent after those 2.5 months is forfeited.

Key Takeaways

  • FSA money does not roll over to the next year — you forfeit any balance you do not spend by December 31 (or your plan year end date).
  • Some employers offer a grace period of up to 2.5 months into the new year to spend remaining FSA funds, but this is optional and not may provide.
  • You can carry over a maximum of $640 (as of 2024) if your plan offers a carryover option instead of a grace period, though most plans do not offer this.
  • To avoid losing money, track your spending throughout the year and estimate your medical and dependent care costs before the plan year ends.
  • If you change jobs or have a may have access to life event, you may be able to withdraw your FSA balance early without penalty.

The grace period option and carryover limits

If your employer's FSA plan includes a grace period, you have until March 15 of the following year (or 2.5 months after your plan year ends) to use any remaining balance. This gives you extra time to submit receipts for medical expenses you incurred before the plan year ended, or to spend the money on may be able to access expenses in early 2025. The grace period applies to the same types of expenses your FSA covers during the regular plan year.

A small number of employers offer a carryover option instead of a grace period. Under this arrangement, you can carry forward up to $640 of unused FSA money into the next plan year (the limit changes annually and is set by the IRS). However, most employers choose the grace period or neither option, so carryover is uncommon. Check your plan summary or call your plan administrator to find out which option, if any, your employer offers.

You cannot have both a grace period and a carryover option in the same plan. Your employer picks one or the other, or neither. If your plan offers neither, all unspent money is forfeited on the last day of the plan year.

How to estimate your FSA contribution and avoid forfeiture

The best way to protect your FSA money is to estimate your expenses accurately before the plan year begins. Look back at the previous year and add up what you actually spent on may be able to access medical and dependent care costs. Include copays, deductibles, prescriptions, vision care, dental work, and dependent care premiums or out-of-pocket costs. Use that number as a starting point for your contribution.

Be conservative with your estimate. If you are unsure whether you will spend $2,500 or $3,000, choose the lower amount. It is better to contribute less and have no forfeiture than to contribute more and lose money. You can only change your FSA contribution during open enrollment or if you have a may have access to life event, such as marriage, divorce, birth of a child, or loss of health coverage.

Throughout the year, keep receipts and track what you spend. Many plan administrators offer a mobile app or online portal where you can see your balance and submit claims. Checking your balance quarterly helps you know whether you are on pace to spend your full contribution by year-end.

What counts as an may be able to access FSA expense

FSA funds can only be used for specific medical and dependent care costs. may be able to access medical expenses include copays, coinsurance, deductibles, prescription medications, glasses and contact lenses, dental work, hearing aids, and mental health treatment. Over-the-counter medications now require a prescription to be FSA-may be able to access, with the exception of insulin, which does not need a prescription.

Dependent care expenses cover daycare, preschool, after-school care, and summer camp for children under age 13, as well as adult day care for a spouse or parent you claim as a dependent. Dependent care FSAs are separate from medical FSAs, and the rules are slightly different, but the use-it-or-lose-it rule applies to both.

Expenses that do not count include health insurance premiums (except COBRA premiums in some cases), cosmetic procedures, gym memberships, and over-the-counter items like vitamins or pain relievers without a prescription. If you are unsure whether an expense is may be able to access, ask your plan administrator before you spend the money.

What happens if you leave your job mid-year

If you leave your job before the plan year ends, you generally lose access to your FSA when ready. Any remaining balance is forfeited, even if your employer's plan includes a grace period. The exception is if you are may have access to to COBRA continuation coverage, which allows you to keep your FSA for a limited time after you leave. However, you must pay the full premium yourself, and the use-it-or-lose-it rule still applies.

Some employers allow you to submit claims for expenses you incurred while employed, even after you have left. The important date to submit these claims is usually 90 days after your termination date. Check with your former employer's benefits department to see whether this option is available and what documentation you need to provide.

Strategies to spend down your FSA before year-end

If you realize in November or December that you have a large FSA balance, you have a few options to use the money before it is forfeited. Stock up on may be able to access over-the-counter items that require a prescription, such as allergy medications or pain relievers. Schedule dental cleanings, eye exams, or other routine care you have been putting off. If you wear glasses or contacts, order a new pair or stock up on contact lens solution.

You can also submit reimbursement claims for expenses you paid out of pocket earlier in the year but never submitted. Gather old receipts and invoices from medical providers, pharmacies, and dependent care facilities, and submit them to your plan administrator. Many plans allow you to submit claims up to 90 days after the plan year ends, even if the expense occurred earlier.

If you have a dependent care FSA, consider paying for care in advance. Some daycare centers and preschools accept advance payments, which you can fund with FSA money. This works only if the care is for the current plan year or the next plan year, and the provider must be may be able to access under FSA rules.

How FSAs differ from Health Savings Accounts

A Health Savings Account (HSA) works very differently from an FSA. HSA money rolls over from year to year and never expires. You can accumulate funds indefinitely and use them whenever you need to pay for may be able to access medical expenses. This makes an HSA much more flexible and valuable for long-term savings, especially if you are healthy and do not expect to spend much on medical care.

However, HSAs have stricter may be able to access rules. You can only open an HSA if you are enrolled in a high-deductible health plan (HDHP). FSAs have no such requirement and are available to anyone whose employer offers one. Additionally, HSAs allow you to invest the money in mutual funds and stocks, whereas FSA funds are typically held in a cash account and earn little to no interest.

If your employer offers both an FSA and an HSA, you cannot contribute to both in the same year. You have to choose one or the other. Many people choose the HSA for its rollover feature, but if you do not have access to an HSA or prefer the lower contribution limits and simpler rules of an FSA, understanding the use-it-or-lose-it rule is essential to avoiding waste.

Frequently Asked Questions

Can I get my FSA money back if I don't spend it?

No. Any FSA balance you do not spend by the end of the plan year (or grace period, if your plan offers one) is forfeited and returned to your employer. There is no way to recover unspent FSA funds once the important date passes. This is why estimating your expenses carefully before enrollment is so important.

What if I have a medical emergency after my FSA runs out?

If your FSA balance is depleted, you will have to pay for the emergency out of pocket. You cannot borrow against future FSA contributions or access money that has already been forfeited. This is another reason to be conservative with your FSA contribution — you want to keep some balance available for unexpected expenses late in the year.

Can I use my FSA for my spouse's medical expenses?

Yes, if your spouse is covered under your health insurance plan. You can use your FSA to pay for your spouse's may be able to access medical and dependent care expenses. However, if your spouse has their own FSA through their employer, they should use their own account first to avoid forfeiture of their funds.

Do I have to submit receipts to use my FSA?

Most plan administrators require you to submit a receipt or explanation of benefits to prove the expense was may be able to access before they reimburse you. Some plans use a debit card that is pre-approved for certain expenses, so you do not need a receipt every time. Check your plan documents or contact your administrator to understand the submission process for your specific plan.

What happens to my FSA if I get divorced?

A divorce is a may have access to life event that allows you to change your FSA contribution or withdraw from your account. You may be able to reduce your contribution if your dependent care expenses decrease, or you may be able to access your remaining balance. Contact your plan administrator when ready after your divorce is finalized to discuss your options.