There's a deadline coming that costs American workers hundreds of dollars every year, and it has nothing to do with taxes or bills.
It's the flexible spending account grace period, and if you don't use that money by the cutoff, it vanishes.
Roughly 30 to 35 million Americans set aside money in an FSA each year, according to industry estimates.
The average worker contributes around $1,500.
Whatever you don't spend by the plan's deadline goes back to your employer.
The rules are trickier than most people realize.
Most plans follow a calendar year deadline, but employers can choose one of two options: a grace period that extends the deadline by up to 2.5 months, or a carryover that lets you roll over a limited amount, which the IRS set at $640 for 2025.
That means two coworkers at the same company could have completely different deadlines depending on how their plan was set up.
Eligible FSA expenses include copays, prescriptions, glasses, contacts, dental work, therapy, bandages, and even sunscreen if it meets the SPF requirement.
But a lot of people wait until December to check their balance, then panic-buy items they don't need.
That defeats the entire purpose of the account, which is to save money on taxes, not to spend money on things you'll never use.
The smarter move is to check your balance now, not in late December.
Log into your benefits portal and find your plan's specific deadline.
If you have a grace period, mark that date.
If you have a carryover, find out the cap.
Then look at what's coming up: annual eye exams, dental cleanings, prescriptions you refill monthly, or a new pair of glasses you've been putting off.
One overlooked option: many plans let you buy eligible items through the FSA store or major retailers with your FSA card.
You can stock up on contact lens solution, first aid supplies, and over-the-counter medications if your plan covers them.
Just check the rules first, because some plans require a prescription for OTC items while others don't.
If you're still sitting on a balance with weeks to go, consider scheduling that dental work or eye exam you've been delaying.
A filling or a new pair of glasses is a legitimate use of the money, and it beats losing it outright.
The real issue here isn't the deadline itself.
It's that the system is designed to let employers keep money that workers earned and set aside.
A use-it-or-lose-it account punishes people for being healthy or for not having predictable medical needs.
Final Thoughts
Until that changes, your best defense is a calendar reminder and a quick check of your balance before the clock runs out.