If you set aside money in a flexible spending account this year, the clock is running out.
Unlike its cousin the health savings account, an FSA is a use-it-or-lose-it arrangement, and millions of American workers are about to forfeit whatever they didn't spend.
The two accounts sound nearly identical at the enrollment screen, but they behave like opposites once the money is deducted from your paycheck.
It's paired with a high-deductible health plan, the balance carries over year after year, and it can be invested like a retirement account.
An FSA is tied to your employer's plan, and in most cases you have to drain it by December 31 or lose the remainder.
With grocery bills still elevated and medical costs climbing, households are stretching every dollar.
Letting a few hundred dollars evaporate at midnight on New Year's Eve is an easy mistake to make and a painful one to fix, because there's no appeal once the deadline passes.
Some employers offer a grace period, usually up to 2.5 extra months, or allow you to carry over a limited amount into the next plan year.
The catch is that these perks aren't guaranteed, and the rules change.
The carryover limit is adjusted periodically for inflation, so a figure you memorized two years ago may no longer be accurate.
The fastest way to find out where you stand is to log into your benefits portal and check two numbers: your remaining balance and your plan's specific deadline.
Then start matching that balance against expenses you already know are coming.
Eyeglasses, contact lenses, and exams usually qualify.
So do dental cleanings, prescription medications, and many over-the-counter items if your plan allows them without a prescription.
Sunscreen, bandages, and menstrual products have become eligible purchases under federal rules.
If you're close to a deductible, scheduling a procedure before year-end can absorb a chunk of the balance.
One trap to avoid: buying things you don't need just to zero out the account.
Spending $200 to protect $150 isn't a win.
If you truly can't use the money, ask whether your plan allows a carryover or grace period before you go on a shopping spree.
For next year, the math deserves a second look.
An HSA is generally the better home for long-term savings if you're eligible, because the money grows tax-advantaged and never expires.
That flexibility has made HSAs one of the few accounts that pulls triple duty: contributions, growth, and qualified withdrawals can all be tax-free.
If you have a predictable, sizable medical expense coming, it lets you set aside more pretax dollars than an HSA allows, and your employer may seed part of it.
The trade-off is that you're betting on your own forecast.
The people who lose money on FSAs usually aren't reckless.
They elect a round number in November, forget about it by spring, and discover the balance in December when there's no time to schedule a dentist appointment.
Set a calendar reminder for October, not December.
That gives you a full quarter to book appointments, refill prescriptions, and order contacts while the balance is still yours to spend.
The takeaway is simple: an HSA rewards patience, and an FSA rewards planning.
If you hold an FSA, treat the next few weeks as a deadline, not a suggestion, because your employer keeps what you leave behind.
Final Thoughts
A 20-minute review of your balance today is worth more than any last-minute scramble once the year flips.