If you set aside money in a healthcare flexible spending account this year, that balance is now a ticking clock.
Most plans require you to spend the funds by December 31, and whatever is left over typically goes back to your employer.
For workers who tucked away $2,000 or $3,000 pre-tax, that can mean losing real money in a matter of weeks.
FSA contributions come out of your paycheck before taxes, so the account feels like a discount — until you forget about it.
Unlike a health savings account, which rolls over year after year, an FSA is a use-it-or-lose-it arrangement.
The IRS does allow employers to offer either a grace period of up to 2.5 months or a carryover of a limited amount into next year, but they are not required to do either.
Many companies offer one or the other, and plenty offer nothing at all.
The average FSA balance sitting unused at year-end tends to run into the hundreds of dollars per person, and across millions of accounts the forfeited total reaches into the billions.
Employers generally keep that money to offset the cost of administering the plan, which is why some benefits teams quietly count on a certain amount of it.
So what actually counts as an eligible expense?
Prescription medications, insulin, and diabetic supplies are covered.
So are eyeglasses, contact lenses, and prescription sunglasses.
Dental work — cleanings, fillings, crowns, even braces — usually qualifies.
Over-the-counter items became eligible again in 2020, meaning pain relievers, allergy pills, bandages, menstrual products, and first-aid kits can all be purchased with FSA dollars without a prescription.
If you are short on time, there are a few fast ways to drain a balance.
Book a dental cleaning or an eye exam before the cutoff, since visits are covered and you may need new lenses anyway.
Stock up on eligible over-the-counter staples you will use eventually.
And check whether your plan's online store lets you order directly with the FSA card, which avoids the reimbursement paperwork.
One important catch: the deadline is often the date of service, not the date you file the claim.
Many plans give you until March or April to submit receipts for expenses incurred in the prior year, so a December appointment still counts even if you pay the bill in January.
Confirm your specific window with your plan administrator rather than assuming.
There is also a use-it-or-lose-it trap to avoid for next year.
If you consistently end up with a leftover balance, consider lowering your election during open enrollment rather than chasing receipts in December.
And if you have predictable, ongoing medical costs, an FSA still beats paying with after-tax dollars — the tax savings are real, sometimes 20 to 30 percent depending on your bracket.
The practical takeaway is simple: check your balance today, not on December 30.
Log into your benefits portal, look at what remains, and map out a couple of eligible purchases or appointments while there is still time to act.
A $40 pair of prescription glasses or a stocked medicine cabinet is a better outcome than watching the money vanish.
It is worth saying plainly that these accounts reward attention and punish procrastination.
Final Thoughts
A few minutes of planning now can save you hundreds of dollars, and the people who lose the most are usually the ones who never checked their balance until it was gone.