Millions of American workers are staring down a deadline this month that has nothing to do with taxes and everything to do with money already deducted from their paychecks.
Flexible spending account funds typically must be spent by December 31, and whatever is left over usually goes straight back to the employer.
The average participant forfeits somewhere between $100 and $500 a year, according to benefits industry surveys, though individual losses can run much higher.
For a household already stretched by grocery bills and rent, that's real money evaporating because of a calendar.
The IRS lets employers offer either a grace period of up to 2.5 months into the next year or a carryover of a limited amount, currently $640, but not both.
Plenty of companies offer neither, which means December 31 is a hard wall.
There's a wrinkle worth knowing: if your plan runs on a fiscal year instead of the calendar year, your deadline may land at a different point entirely.
Check your plan documents or the benefits portal before assuming you have until New Year's Eve.
The good news is that last-minute spending is easier than it sounds.
FSA dollars cover things people buy anyway: prescription medications, insulin, bandages, contact lenses, eyeglasses, sunscreen with SPF 15 or higher, menstrual products, and over-the-counter pain relievers.
Many retailers, including major drugstore chains, label FSA-eligible items directly on shelf tags and online filters.
Dental and vision appointments are the classic year-end move.
A December cleaning, a new pair of glasses, or a set of contact lenses can absorb several hundred dollars fast.
Some plans also reimburse mileage driven for medical care at the IRS standard rate.
If you're nowhere near using the balance, an online FSA store can help you burn through it in an afternoon.
Compression socks, thermometers, first-aid kits, blood pressure monitors, and breast pumps are all commonly eligible.
Just confirm your specific plan's rules, since eligible expense lists vary.
One caution: you generally can't use FSA funds to stockpile items for next year's expenses, and the IRS expects purchases to be for care received during the plan year.
Ordering on December 31 usually counts, but shipping delays don't extend the deadline.
Claims often must be submitted after the plan year ends, giving you a window in early next year to file receipts.
Miss that filing deadline and the money is gone even if you spent it.
Workers who switched jobs midyear, changed plans, or had a life event should double-check their balance carefully.
It's easy to forget a card you barely used, and those balances don't roll into a 401(k) or a bank account.
The bigger structural issue is that FSAs punish people for not getting sick or not needing care.
Unlike health savings accounts, which carry balances forward and can be invested, FSAs remain a use-it-or-lose-it proposition that shifts forfeited dollars to employers.
Final Thoughts
Until that changes, the December scramble is a ritual every worker should treat like a bill that's due.