FSA deadlines: use-it-or-lose-it, grace periods, and rollovers
Your FSA forfeits unspent funds at year-end unless your plan offers a grace period or carryover. Here's how to make sure you don't leave money on the table.
The 'use it or lose it' rule is the catch with FSAs. Money you don't spend by the plan year deadline disappears. Two relief mechanisms exist — but only if your employer offers them, and they can't both apply at once.
The three possible deadline structures
- Hard deadline (use-it-or-lose-it) — All funds must be spent by December 31. Anything left is forfeited to the employer.
- Grace period — You get an extra 2.5 months (typically until March 15) to incur new expenses against the prior year's balance.
- Carryover — Up to $660 (2026) of unused funds rolls into the next plan year. The rest is forfeited.
Which one applies to your FSA?
- Check your summary plan description
Look for 'grace period' or 'carryover.' Plans cannot offer both, so it's one or the other (or neither).
- Note the run-out period
Even after the deadline to incur expenses, you typically have a 'run-out period' (often through March 31) to submit claims for expenses already incurred.
- Estimate your balance early
Check your balance in October or November. Plan November/December purchases to use it down if needed.
Year-end strategies if you're overfunded
- Schedule a backlogged dental cleaning or eye exam.
- Order a fresh supply of contact lenses or backup glasses.
- Refill prescriptions early, where allowed by your plan and pharmacy.
- Stock up on FSA-eligible OTC products from FSAstore.com — pain relievers, allergy meds, first-aid supplies, sunscreen, period products.
- Pay outstanding medical bills with the FSA card if you've been holding them off.
FAQ
- What's the difference between the deadline to incur an expense and to submit a claim?
Incurring a date is when you got the service or bought the item. Submitting is when you send the claim to your administrator. Most plans give you a few months after year-end to submit claims for expenses incurred during the plan year.
- Can my employer keep my forfeited FSA dollars?
Yes, but only to pay the FSA program's administrative costs or to redistribute equally to all FSA participants the following year. Employers can't simply pocket it.
- Can I be reimbursed for an expense from last year if I find the receipt after the deadline?
Only if your plan's run-out period for submitting claims is still open. After that, no — even for receipts you forgot.