Millions of American workers are about to forfeit money they already earned.
Flexible spending account balances must typically be spent by December 31, and this year the deadline collides with rising grocery bills and a shorter holiday shopping window.
If you set aside $2,000 in 2024 and only used $1,400, that remaining $600 doesn't roll into your checking account.
Employers can keep a portion of forfeited funds to cover administrative costs, according to IRS rules governing these accounts.
The good news: the IRS allows a carryover of up to $640 into 2025 for 2024 plan balances, but only if your employer opted into it.
Many plans skipped that option to save money.
Some offer a grace period through March 15 instead.
You need to check your specific plan documents, not assume.
Retailers are noticing the last-minute scramble.
Chains like Walgreens, CVS, and Walmart have pushed FSA-eligible product displays toward the front of stores, and Amazon now runs a dedicated FSA storefront.
But there's a catch that's tripping up shoppers: many stores are tightening how they verify FSA cards at checkout.
Walmart, for instance, restricts FSA card use to specific eligible items and can decline mixed carts.
Target's system flags non-eligible items and forces a second payment method mid-transaction.
If you're buying sunscreen, bandages, and a birthday card in one trip, your card may reject the whole order.
That friction is pushing more people toward the reimbursement route.
You pay out of pocket, keep the receipt, and submit a claim.
It's slower, but it works when card systems fail.
Just remember the claim still has to be filed before your plan's deadline, not the purchase date.
Here's where households often leave money behind.
FSA funds cover far more than prescriptions.
Eligible expenses include contact lenses and solution, insulin, blood pressure monitors, breast pumps, ovulation tests, hearing aid batteries, and even some home COVID tests.
Over-the-counter medicines became permanently eligible in 2020 under the CARES Act.
Dependent care FSAs follow a different calendar and set of rules, so don't mix them up.
That money covers daycare, after-school programs, and summer camp, and it has its own separate deadline and carryover limits.
The simplest move this week: log into your FSA administrator's portal and check your exact balance.
Then check your plan's deadline and whether a carryover or grace period applies.
If you have a few hundred dollars left, book a dental cleaning, refill a year of contacts, or stock up on eligible basics before the clock runs out.
Scammers flood social media every December with "FSA liquidation" offers and fake storefronts claiming to accept your card for gift cards or electronics.
Those purchases are not eligible, and the IRS can require you to repay the money with taxes. **Our take:** A use-it-or-lose-it account is a strange thing to hand American workers, especially in a year when every grocery dollar already feels stretched.
The deadline isn't a budgeting failure on your part; it's a design flaw in the system.
Final Thoughts
Spend what you can, document everything, and treat next year's election amount like a bet you're not sure you'll win.