Millions of American workers are staring down a deadline they forgot existed.
Money set aside in a flexible spending account for medical costs this year has to be spent by December 31 in many plans, and whatever is left over typically vanishes.
Workers commonly elect anywhere from a few hundred to more than $3,000 per year into these accounts, funded through pre-tax payroll deductions.
But it only pays off if the money actually gets used before the clock runs out.
The rules aren't one-size-fits-all, and that confusion is exactly what trips people up.
Some employers offer a grace period of up to 2.5 months into the next year.
Others allow a carryover of a limited amount, which the IRS set at $640 for 2025.
If you don't know which category your plan falls into, you could be planning around a deadline that doesn't match your reality, or ignoring one that does.
The good news is there's usually a scramble-friendly list of eligible expenses.
Prescription glasses and contacts, dental work, therapy, bandages, pregnancy tests, and many over-the-counter medicines all typically qualify.
Some plans even cover sunscreen, acne treatments, and menstrual products thanks to recent rule changes.
If you've been putting off an eye exam or a dental cleaning, December is the moment to book it.
A few practical moves can rescue a balance fast.
First, log into your benefits portal and confirm your exact deadline and carryover terms.
Then check whether your plan offers an online store for eligible items, many do, and they make it easy to burn a remaining balance in one order.
Finally, remember that many plans reimburse you for purchases already made this year, so dig through receipts from the past several months before assuming you have nothing to claim.
One more thing worth checking: dependent care FSAs run on separate rules and separate deadlines.
If you pay for daycare or after-school care, that account may also have money sitting idle.
These funds often have a different carryover structure, so don't assume the medical account rules apply.
The deeper issue is that these accounts punish people for being busy.
Life gets in the way, appointments get rescheduled, and suddenly it's the last week of December with hundreds of dollars on the line.
Employers rarely send loud reminders, and the forfeiture happens silently.
Our take: if you have an FSA balance, treat this week like a bill that's due.
Book the appointment, place the order, or file the claim.
Final Thoughts
Letting pre-tax money evaporate is one of the few financial losses in America that's completely avoidable, and it stings more than most.