There's a deadline coming that nobody's talking about, and it could quietly cost you hundreds of dollars.
If you have a flexible spending account through work, the money you set aside for 2025 usually has to be spent by December 31 — or you forfeit whatever's left.
Roughly $400 million in FSA funds gets surrendered to employers every year, according to estimates from the Employee Benefit Research Institute.
Employers are legally allowed to keep that money.
Some use it to offset the cost of administering the plan.
FSA contributions skip federal income tax and payroll tax, which is the whole point — a $2,000 election might effectively cost you around $1,500 in take-home pay.
But unspent dollars vanish, and you don't get the tax break back either.
There are two escape hatches, and they're not guaranteed.
Some employers offer a grace period, letting you spend 2025 funds until March 15, 2026.
Others offer a carryover, which lets you roll a limited amount — $640 for plan years starting in 2025 — into the next year.
Your plan might offer one, both, or neither.
The only way to know is to read your plan documents or call your benefits administrator.
So what do you actually do with the money?
Eligible expenses go well beyond doctor visits.
Bandages, sunscreen with SPF 15 or higher, pregnancy tests, blood pressure monitors, contact lens solution, and prescription sunglasses all typically qualify.
So do copays, dental cleanings, eyeglasses, hearing aids, and therapy sessions.
Over-the-counter medications became eligible again in 2020, so that drugstore run counts too.
The catch is that you generally can't just stockpile items for next year's needs if your plan requires a prescription for OTC meds — rules vary by plan, and some administrators ask for a letter of medical necessity on certain items.
Receipts matter, and so does the deadline for filing claims, which is often separate from the spending deadline.
Think about who benefits from the current setup.
Employers get free money from workers who overestimate their medical spending.
Third-party FSA administrators collect fees either way.
And the use-it-or-lose-it rule pushes people into December spending sprees on things they may not need — which is its own kind of waste.
The smarter play is boring: estimate low.
If you're consistently forfeiting money, you're basically donating your salary to your company's benefits budget.
Next open enrollment, run the math on what you actually spent this year, not what you hoped to spend.
One more thing worth knowing — if you're leaving your job, your FSA usually dies with your employment unless you elect COBRA, which rarely makes financial sense just to keep an FSA alive.
Check the specific rules for your plan type, because dependent care FSAs and health FSAs follow different timelines.
The takeaway: this deadline rewards people who plan and punishes people who forget.
Set a calendar reminder, log into your account, and look at the balance.
If it's a few hundred dollars, book that dental cleaning you've been putting off or restock the medicine cabinet.
Final Thoughts
Your money is already gone from your paycheck.