If you have a flexible spending account through work, there's a decent chance a chunk of your own money is sitting in it right now, quietly expiring.
Most FSA plans run on a calendar year, which means any money you set aside but didn't spend by December 31 typically vanishes.
Here's the part that surprises people: that leftover cash usually goes back to your employer.
Under IRS rules, companies can keep forfeited FSA funds to offset the cost of administering the plan.
So when HR sends that cheerful year-end reminder to "use it or lose it," they're not just being helpful.
In 2024, workers could stash up to $3,050 in a health FSA, and the limit rises to $3,200 for 2025.
A 2023 analysis by the Employee Benefit Research Institute found that across roughly 4 million accounts, workers forfeited hundreds of millions of dollars in a single year.
That's real money for households already stretched by grocery bills and rent.
Some employers offer a grace period, letting you spend last year's funds until March 15.
Others allow you to carry over up to $640 into the next plan year, up to $660 in 2025.
But neither perk is guaranteed, and many plans offer one or the other, not both.
You have to read your own plan documents, not assume.
Bandages, blood pressure monitors, contact lens solution, eyeglasses, hearing aid batteries, sunscreen with SPF 15 or higher, pregnancy tests, breast pumps, and most prescription medications.
Over-the-counter medicines became eligible again in 2020, no prescription required.
Dental cleanings, copays, therapy sessions, and even some acupuncture visits count too.
The catch is that many of these purchases need to happen before the deadline, not just be ordered.
If you're scrambling in late December, online FSA stores from retailers like Amazon, Walmart, and Walgreens filter products by eligibility, which saves guesswork.
Just confirm the charge actually clears your card before midnight on the 31st.
If you're staring down a balance you can't spend in time, a few moves are legitimate.
Book a dental or vision appointment now, even if it's weeks out, as long as the service is dated within your plan year.
Stock up on eligible everyday items you'll use anyway.
Check whether your plan reimburses mileage for medical travel or dependent care costs.
What you shouldn't do is panic-buy random stuff hoping it qualifies.
Ineligible purchases get denied, and you've spent money you can't get back either way.
The deeper issue is that FSAs shift the burden of forecasting onto workers.
You have to guess your family's medical needs a year in advance, and if you guess wrong, you lose.
Employers and the tax code absorb the upside.
That's not a scam exactly, but it's not a great deal either.
Final Thoughts
The lesson is simple: treat that balance like cash with an expiration date, because that's precisely what it is.