Your flexible spending account is a use-it-or-lose-it gamble, and most people don't realize they're losing until the money is already gone.
If you set aside funds through a workplace FSA this year, there's a decent chance a chunk of it is still sitting there with an expiration date attached.
Miss it, and that cash doesn't roll into your pocket—it goes back to your employer.
Here's the part that trips people up: the deadline isn't always December 31.
Many plans offer a grace period, typically up to two and a half months into the new year, while others allow a carryover of a limited amount.
The catch is that these rules are set by your specific employer, not the IRS alone, so two coworkers at different companies can face completely different cutoffs.
A 2023 survey from the Employee Benefit Research Institute found that workers routinely forfeit hundreds of dollars in FSA funds each year, often simply because they didn't know the rules or forgot to check a balance.
So who actually benefits when you let it lapse?
Forfeited funds generally stay with the employer, who can use them to offset the cost of administering the plan.
It's a quiet subsidy funded by forgetfulness, and nobody sends you a reminder card when your window is closing.
The practical move is boring but effective.
Log into your benefits portal this week, not next month, and find two numbers: your remaining balance and your exact deadline.
Then check whether your plan allows carryover or a grace period, because assuming it doesn't could cost you, and assuming it does could cost you more.
If you've got money to burn, eligible expenses are broader than most people think.
Over-the-counter medicines, bandages, contact lens solution, sunscreen, menstrual products, and even some COVID tests qualify.
You can also often use FSA funds for dental work, vision exams, prescription glasses, and copays—services you may already have scheduled.
Stockpiling eligible items you'll genuinely use before the deadline is a legitimate way to avoid losing the balance.
One warning worth repeating: don't buy things you don't need just to "use it up." Spending $200 to save $150 in taxes is a losing trade.
The goal is to redirect money you were going to spend anyway, not to manufacture purchases.
Also worth a call: your HR or benefits administrator.
Ask directly whether your plan has a run-out period—an extra stretch after the deadline to submit claims for expenses you already incurred.
That's different from a grace period, and plenty of people conflate the two and miss out on reimbursements they'd already earned.
The uncomfortable truth is that FSAs are designed around a deadline because the system depends on some people missing it.
That's not a conspiracy, just an incentive structure, and you're the only one motivated to beat it.
Final Thoughts
Set a calendar reminder, check your balance, and treat the cutoff like a bill that's due—because functionally, it is.