Every year, millions of American workers stuff pretax dollars into a flexible spending account, then treat the money like it's a gym membership they'll definitely use later.
Miss the deadline and the balance doesn't roll into your checking account — it goes to your employer, and you get nothing.
Here's the part that trips people up: there's no single national deadline.
Most plans follow the calendar year, meaning you need to spend the money by December 31.
But your employer can choose a different plan year, and many offer a grace period of up to 2.5 months into the next year.
Some plans also allow a carryover of a limited amount — for 2024, that's $640 — but only if your employer opted in.
It's to log into your benefits portal and find your plan's actual rules.
Three things matter: the plan year end date, whether there's a grace period, and whether a carryover exists.
If you have a grace period, you technically have until mid-March to use last year's funds.
If you don't, the clock is already running out.
The average FSA contribution is often cited around $1,000 to $1,500, and industry surveys consistently show a meaningful chunk of account holders forfeit some money each year.
That's not a scandal — it's a design feature.
Your employer keeps the forfeited funds, which is one reason some benefits administrators aren't exactly shouting reminders from the rooftops.
What actually counts as a qualifying expense?
The list is longer than most people assume.
Bandages, contact lens solution, sunscreen with SPF 15 or higher, pregnancy tests, thermometers, blood pressure monitors, and even some over-the-counter medicines now qualify thanks to a 2020 law.
You can also use FSA money for dental work, vision exams, glasses, hearing aids, and mental health sessions.
The fastest way to drain a balance without waste: schedule that dental cleaning, refill prescriptions early, stock up on eligible OTC items, or book an eye exam you've been putting off.
Many FSA store websites exist specifically to sell eligible products, though be wary — prices there are sometimes higher than buying the same item elsewhere and submitting a claim.
One thing worth noting: dependent care FSAs follow a completely different set of rules and deadlines, and they don't cover medical costs.
Mixing the two up is a common and expensive mistake.
If you're close to the wire, don't guess.
Call your plan administrator and ask directly what happens to leftover funds and what the exact cutoff is.
A five-minute call can save you several hundred dollars. **The bottom line:** FSAs reward people who plan and quietly penalize people who don't.
If your employer offers a carryover or grace period, use it as breathing room, not as an excuse to procrastinate.
Final Thoughts
And if you're consistently forfeiting money every year, it may be worth lowering your contribution — free money isn't free if you never get it back.