There's a pile of money sitting in accounts across the country with an expiration date, and a lot of workers will let it vanish.
It's your flexible spending account, or FSA, and the deadline to spend what you set aside is closer than you think.
If you elected an FSA through your job, you agreed to have a set amount pulled from each paycheck, pre-tax, to cover things like copays, prescriptions, glasses, and dental work.
The catch: for most plans, that money is use-it-or-lose-it.
Whatever you don't claim by the end of your plan year typically goes back to your employer.
The good news is that many plans don't cut off exactly at December 31.
Two rules can buy you extra time, and they're easy to overlook.
The first is a grace period, which gives you up to two and a half months after your plan year ends to spend the balance.
The second is a carryover, which lets you roll a limited amount into next year.
For 2024 balances moving into 2025, that carryover cap is $640.
Your plan might offer one of these, both, or neither, so check your summary plan description or call your benefits administrator.
Here's the part that trips people up: even with a grace period, you usually have to incur the expense by the deadline, then submit the claim afterward.
Swiping your FSA card at the pharmacy counts right away.
Paying out of pocket and forgetting to file a claim does not.
Over-the-counter medicines now qualify without a prescription, thanks to a change that took effect in 2020.
That includes pain relievers, cold medicine, allergy pills, and menstrual products.
You can also stock up on bandages, first-aid kits, sunscreen, contact lens solution, and thermometers.
Prescription glasses and sunglasses, hearing aids, dental cleanings, braces, and therapy sessions are all eligible.
Some plans even cover breast pumps and certain medical equipment.
If you're unsure about a specific purchase, the IRS maintains a searchable list, and your plan administrator can confirm.
One deadline trap worth flagging: dental and vision appointments fill up fast in December.
If you've been putting off that eye exam or cleaning, book it now.
A new pair of glasses can wipe out a leftover balance in one visit.
If you truly can't spend it all, some retailers let you use FSA funds on eligible items online, and a few stores have special "FSA store" sections that only show qualifying products.
Just don't buy things you'll never use just to zero out the account.
And a reminder for next year: if you consistently overestimate, lower your election during open enrollment.
Setting aside $2,000 when you typically spend $800 just means handing your employer free money.
Log into your FSA portal today, check your balance and your exact deadline, and make a plan before the calendar runs out.
Final Thoughts
That money was yours the moment it left your paycheck, and it's worth ten minutes to keep it.