There's a pile of your own money sitting in an account right now, and if you don't spend it by a certain date, your employer gets to keep it.
It's not a scam or a hidden fee—it's just how flexible spending accounts have always worked.
And every March, millions of Americans learn this the hard way.
If you set aside money in a healthcare FSA through your job, the clock is ticking.
Most plans follow a calendar year, which means the funds typically need to be spent by December 31.
But here's the part that trips people up: many employers offer a grace period that pushes the real deadline to March 15 of the following year.
The catch is that a grace period isn't guaranteed.
Your HR department decides whether to offer one, and plenty of companies don't.
Some plans instead use a carryover rule, letting you roll up to a set amount—$640 for 2025—into the next year.
You can have a grace period or a carryover, but not both.
So how much money are we actually talking about?
The average FSA contribution runs somewhere between $1,000 and $1,500 a year, and industry surveys have found that workers forfeit hundreds of millions of dollars annually.
If you're sitting on $400 you forgot about, that's a car payment, a week of groceries, or a chunk of your deductible gone for good.
The good news is that the list of eligible expenses is longer than most people realize.
Beyond doctor visits and prescriptions, you can usually use FSA dollars on contact lenses, glasses, hearing aids, bandages, thermometers, acne treatments, sunscreen with SPF 15 or higher, and menstrual products.
Many plans now cover over-the-counter medicines without a prescription, thanks to a change that took effect in 2020.
You can also stack up on things you'll need eventually.
If your plan allows it, buying a year's worth of contact lenses or restocking the medicine cabinet is a legitimate way to zero out the balance before it vanishes.
One more thing worth checking: dependent care FSAs run on a separate track with their own rules and uses, like daycare and after-school programs.
Don't mix the two up when you're racing the deadline.
Log into your benefits portal today and find your exact balance and deadline—don't assume.
Then check whether your plan has a grace period or a carryover, because that changes your timeline completely.
If you're short on time, book that eye exam, refill prescriptions, or order eligible supplies online before the cutoff.
Set a calendar reminder for early December next year, too.
The people who lose money aren't careless—they just never got a warning.
My honest take: FSAs are one of the few tax breaks that punish you for being disorganized, and that's backwards.
Until the rules change, treat your balance like a gift card with an expiration date.
Final Thoughts
Spend it on something real, because letting it expire is the only way to guarantee you get nothing back.