There's a deadline looming that almost nobody talks about, and it could cost you hundreds of dollars.
If you set aside money in a flexible spending account this year, that cash generally has to be spent by December 31 — or you forfeit it.
Roughly $400 million in FSA funds gets surrendered to employers every year, according to estimates from the Employee Benefit Research Institute and benefits administrators.
For the average worker, that's not abstract.
It's money that came out of your paycheck, pretax, and now it's gone.
You elect an amount during open enrollment, and your employer deducts it from each paycheck before taxes.
The trade-off for that tax break is the "use it or lose it" rule.
Unlike an HSA, which rolls over year to year, an FSA is meant to be spent within the plan year.
There are two safety valves, but they're not guaranteed.
Some employers offer a grace period, usually up to 2.5 months into the new year.
Others allow a carryover of a limited amount — for 2025, that cap is $660.
Your plan might offer one, both, or neither, so check your benefits portal before you assume you're covered.
Prescription medications, insulin, bandages, contact lenses and solution, eyeglasses, hearing aids, and menstrual products all qualify.
So do many over-the-counter items if you have a prescription, and a long list of medical devices like blood pressure monitors and breast pumps.
Dependent care FSAs are a separate bucket with their own rules, covering daycare, before- and after-school programs, and summer day camp for kids under 13.
The smart move right now is to log into your FSA administrator's website and check your balance.
Then look at what you'll actually need in the next few months.
If you have a recurring prescription, refill it.
You can also stock up on eligible supplies before December 31.
One popular strategy: many FSA administrators run online stores where you can order eligible items directly, and some let you buy glasses or contacts through partner retailers.
Just confirm the purchase date falls within your plan year, since claims are typically based on when you bought the item, not when you got reimbursed.
If you use an FSA debit card, save documentation anyway — the IRS can ask for proof, and administrators sometimes request it retroactively.
Submitting a claim without a receipt is one of the most common reasons reimbursements get denied.
If you're staring at a balance you can't possibly spend, ask your HR department about your plan's specific deadline.
Some employers quietly offer a grace period that employees never bother to look up.
The bigger lesson is for next year's open enrollment.
It's tempting to max out the account for the tax savings, but overfunding is how people end up donating their own money back to their employer.
Underfund slightly, and you'll rarely regret it. --- The FSA deadline is one of the few financial cliffs Americans face every single year, and it arrives with almost no warning.
Spending a few minutes checking your balance today beats losing a few hundred dollars on January 1.
Final Thoughts
If your employer offers a carryover or grace period, use it — but never count on it unless you've seen it in writing.