If you set aside money in a flexible spending account this year, there's a deadline coming that could cost you real dollars.
Roughly $3,000 to $3,200 sits in the average FSA, and whatever you don't spend by the plan's cutoff typically disappears.
Unlike a bank account, this money doesn't roll over indefinitely, and your employer keeps the leftover balance once the clock runs out.
The tricky part is that the deadline isn't the same for everyone.
Many plans follow the calendar year, but some run on a fiscal year that ends in June, September, or another month.
Your window could be closer than you think, and the only way to know for sure is to check your plan documents or call your benefits administrator.
There's also a confusing mix of grace periods.
Some employers give you until March 15 to spend last year's funds.
Others offer a carryover that lets you roll a limited amount, often around $640, into the next year.
Many offer neither, which means December 31 is a hard wall.
The good news is that eligible expenses go well beyond doctor visits.
You can usually use FSA dollars on prescription glasses, contact lenses, bandages, first-aid kits, sunscreen with SPF 15 or higher, thermometers, blood pressure monitors, and even some over-the-counter medicines.
Menstrual products and COVID-19 tests also qualify under current rules.
If you're short on time, a few moves can help you spend down a balance fast.
Book that dental cleaning or eye exam you've been putting off.
Refill prescriptions early if your plan allows it.
Stock up on eligible drugstore items before the deadline hits.
Some retailers, including Amazon and Walmart, run FSA-eligible storefronts that make it easy to filter for qualifying products.
One caution: don't panic-buy things you'll never use just to drain the account.
An FSA claim can be denied if the item doesn't meet IRS rules, and you'd be stuck with a receipt you can't submit.
Keep your receipts anyway, since you may need them if the card gets flagged or the purchase needs verification.
Some FSA cards require you to re-submit documentation for certain purchases, and a denied charge can leave you scrambling.
Log into your account portal now, check your balance, and confirm your exact deadline before the last week of the year, when everyone else is doing the same thing.
If you truly can't spend the money in time, ask whether your plan allows a run-out period.
That's a short window after the deadline, sometimes 90 days, to submit claims for expenses you already paid.
It won't save unspent funds, but it can rescue receipts you forgot to file.
The bottom line: this is one deadline where procrastination has a price tag.
A 20-minute review of your balance and your plan rules could be worth hundreds of dollars.
Final Thoughts
Treat it like a bill you have to pay, because ignoring it means you're the one footing the loss.