If you have a flexible spending account through work, there's a decent chance you're about to hand free money back to your employer.
Most healthcare FSAs run on a calendar year, which means the balance has to be spent by December 31.
Employers forfeit an estimated $300 million to $500 million in unspent FSA funds every year, according to benefits industry estimates.
That works out to roughly $400 to $500 per worker who loses money, based on average forfeiture data.
It's one of the few financial deadlines that punishes you for doing nothing.
The good news: you probably have more time than you think, and more ways to spend the balance than you realize.
Here's how to avoid being the person who donates their own money to the accounting department. **Know your actual deadline** Not every plan ends December 31.
Some employers offer a grace period of up to 2.5 months, pushing the deadline into mid-March.
Others allow a carryover of up to $640 into the next plan year.
Some offer one or the other, and a few offer neither.
Your plan documents or benefits portal will spell out which applies.
If you have a grace period, you can still incur new expenses after January 1 and get reimbursed from last year's balance.
That's a real extension, not just extra time to file paperwork. **Spend it on things you'd buy anyway** The FSA Store and similar sites exist for a reason, but you don't need to panic-buy gauze.
Eligible expenses include contact lenses and solution, prescription sunglasses, bandages, thermometers, blood pressure monitors, acne treatments, sunscreen (with SPF 15 or higher), menstrual products, and pregnancy tests.
Over-the-counter medicines are eligible again without a prescription, a change that has stuck since 2020.
If you wear glasses, a new pair is the fastest way to burn a few hundred dollars.
Vision expenses are almost always eligible, and you'd be buying them eventually anyway. **Check what you've already paid out of pocket** Here's the part most people skip.
If you paid for a copay, a dental filling, or a therapy session with a credit card back in March, you can still submit that receipt now and reimburse yourself.
The expense just has to have occurred during the plan year.
Dig through your email for receipts and your insurance portal for claims history. **The deadline trap nobody warns you about** The spending deadline and the submission deadline are not the same thing.
You might need to incur the expense by December 31 but have until March or April to file the claim.
Miss the filing window and the money is gone even though you spent it correctly.
Set a calendar reminder for both dates. **If you're going to lose it anyway** Some plans let you use remaining funds for eligible dependents, so a spouse's or child's medical expenses may count even if they're not on your insurance.
A few employers allow a mid-year election change, though that's rare and usually tied to a qualifying life event.
The uncomfortable truth is that FSAs are a gamble the house usually wins.
You predict your medical spending in November for the year ahead, and life rarely cooperates.
The system rewards people with predictable, ongoing expenses and quietly taxes everyone else.
So treat the next few weeks like a scavenger hunt through your own receipts.
Final Thoughts
That money was never your employer's to keep, and it's not a bonus if you let it slip away.