There's a pile of your own money sitting in an account right now, and it has an expiration date.
If you set aside funds in a flexible spending account through your employer, that cash typically comes with a use-it-or-lose-it rule.
Miss the deadline, and the balance doesn't roll into your bank account.
The tricky part is that "deadline" doesn't mean what most people assume.
For many plans, the spending cutoff isn't December 31.
Employers often build in a grace period, frequently until March 15, letting you incur new expenses against last year's balance.
Others offer a carryover, which the IRS caps at $640 for 2025 plan years.
That mismatch between what workers think and what their plan actually allows is where money disappears.
A 2024 survey from the Employee Benefit Research Institute found that roughly a third of account holders forfeited at least some funds the previous year.
The average forfeited amount hovered around $300, though it climbs much higher for higher earners who max out contributions.
Here's why this matters beyond the obvious.
FSA money is pre-tax, so losing $400 stings more than losing $400 of take-home pay.
At a 22% federal bracket, you'd need to earn roughly $513 to replace it.
The forfeiture is effectively a tax on forgetting.
The fix isn't complicated, but timing is everything.
If your plan runs on a grace period, you generally have until mid-March to spend down the prior year's balance.
If it uses carryover, a limited amount rolls forward automatically.
If it uses neither, your window closed December 31 and the only move left is to check whether you had expenses you never submitted.
You can incur an expense in January and still get reimbursed months later, as long as the service date falls inside the eligible window.
Many workers assume the claim itself must be filed by the deadline and give up early.
Check your plan's submission window separately from its spending window.
Eligible expenses go well beyond doctor visits.
Bandages, contact lens solution, sunscreen with SPF 15 or higher, menstrual products, and over-the-counter medicines now qualify without a prescription thanks to the CARES Act.
First aid kits, thermometers, and even some pregnancy tests count.
Dental cleanings, eyeglasses, and therapy copays all apply.
One caution: the rules shift with legislation and each employer's plan design.
A website's general list won't tell you what your specific administrator accepts.
Log into your FSA portal, pull the plan document, and confirm both dates before you assume anything.
If you're staring down a balance with days to go, a few practical moves help.
Book that dental cleaning you've been postponing.
Refill prescriptions early if your plan allows it.
Stock up on eligible over-the-counter items you'll genuinely use.
Just avoid buying things you don't need purely to beat a clock, since that defeats the purpose of tax-advantaged saving.
For next year, the smarter play is contribution math.
Estimate predictable expenses like copays, prescriptions, and vision costs, then set aside slightly less than that total.
Underfunding a little beats forfeiting a lot.
The uncomfortable truth is that FSAs reward people who plan and quietly punish everyone else.
A few minutes in your benefits portal this week could be worth several hundred dollars.
Final Thoughts
Set a calendar reminder for next fall, and treat the balance like a bill you owe yourself.