There's a deadline lurking on many Americans' calendars that costs workers real money every single year, and most people don't think about it until it's too late.
If you have a flexible spending account through your job, the funds you set aside usually have to be spent by December 31 — or you forfeit whatever is left.
Unlike a health savings account, which rolls over year after year, an FSA generally follows a use-it-or-lose-it rule.
That means the money you elected to withhold from your paychecks doesn't sit waiting for you.
Your employer keeps the leftover balance.
For 2025, workers can stash up to $3,300 in a health care FSA and $5,000 in a dependent care FSA.
A 2024 Employee Benefit Research Institute survey found that a meaningful share of account holders forfeit funds annually, often because they simply forgot or assumed the deadline was later than it was.
The good news is that many plans offer a grace period or a carryover, but the rules vary wildly.
Some employers let you roll over up to $660 into the next year.
Others give you until March 15 to spend down the prior year's balance.
You have to check your specific plan documents — there's no universal answer.
So what can you actually spend it on before the clock runs out?
FSA dollars cover a wider range than people realize.
Prescription glasses and contacts, dental work, hearing aids, bandages, sunscreen, menstrual products, and even some over-the-counter medications qualify.
Many retailers like Amazon, Walgreens, and CVS have dedicated FSA storefronts that flag eligible items so you don't have to guess.
If you're staring down a balance you can't realistically use, consider scheduling that dental cleaning, refilling a year of contacts, or stocking up on eligible first-aid supplies.
Some plans also reimburse mileage for medical travel.
One warning: don't panic-spend on things that aren't actually eligible.
Claims get denied, and you'll be right back where you started with less time.
Read the fine print or call your plan administrator before you check out.
A quick call to your HR department or a login to your benefits portal can tell you your exact balance, your plan's deadline, and whether a grace period applies.
That ten-minute task could be worth hundreds of dollars.
It's a strange system when the penalty for forgetting is losing your own money, but that's the reality of how most FSAs are built.
Mark the deadline now, spend deliberately, and treat the balance like the expiration date it is.
Final Thoughts
Nobody should hand their paycheck back to their employer by accident.