There's a deadline lurking on many calendars this month that has nothing to do with taxes or rent, and missing it can quietly cost you hundreds of dollars.
It's the deadline to spend down your flexible spending account, the pre-tax money your employer lets you set aside for medical and dependent care costs.
Roughly 35 million Americans have access to an FSA, according to the health benefits nonprofit KFF, and the rules are unforgiving in a way that catches people off guard every single year.
Unlike a bank account, an FSA is a use-it-or-lose-it arrangement.
Money you elected to set aside comes out of your paycheck before taxes, which lowers your taxable income and stretches each dollar a bit further.
But if you don't spend the balance by your plan's deadline, your employer generally keeps whatever is left.
The good news is that many plans offer a grace period of up to 2.5 months after the calendar year ends, or let you carry over a limited amount into the next year.
For 2025, the IRS caps that carryover at $660.
The catch is that these features are optional, so you have to check your own plan documents rather than assume.
A quick inventory of your household usually turns up more eligible expenses than people expect.
Copays for doctor visits, prescription refills, eyeglasses, contact lenses and solution, dental cleanings and fillings, therapy sessions, and bandages or first-aid supplies all typically qualify.
A few less obvious ones are worth knowing.
Many plans reimburse mileage driven to medical appointments, at the IRS standard rate of 21 cents per mile for 2025.
Sunscreen with an SPF of 15 or higher counts as an over-the-counter medical expense.
Menstrual products became eligible under federal law in 2020.
And if you have a dependent care FSA, day care, after-school programs, and summer day camp can all draw down that balance.
Timing matters as much as the spending itself.
Swipe your FSA card at the pharmacy register and the claim is usually processed on the spot.
Buy a qualifying item online and pay out of pocket, and you'll need to submit a receipt for reimbursement, which can take weeks to land.
If your deadline is days away, in-store purchases are the safer bet.
You can also shop the FSA Store or similar retailers that only stock eligible products, which removes the guesswork.
Just avoid letting the deadline push you into buying things you'll never use.
A drawer full of expiring bandages isn't a win.
One more thing worth checking: some employers let you submit claims for expenses you incurred earlier in the year, even if you only get around to filing the paperwork now.
That means a receipt from a July dentist visit could still rescue a December balance.
If you truly can't spend the money in time, ask your HR department whether your plan has a grace period or carryover before you give up on it.
And if you find yourself scrambling every year, it may be worth lowering your election during the next open enrollment so your paycheck stops funding a deadline you keep missing. **Our take:** An FSA is one of the few tax breaks that rewards a little planning and punishes neglect in the same breath.
Final Thoughts
Ten minutes with your plan documents and a stack of receipts beats donating your own money back to your employer.