FSA accounts do not roll over — you lose any money you don't spend by December 31st

A Flexible Spending Account (FSA) operates under a "use-it-or-lose-it" rule set by the IRS. Any balance remaining in your account at the end of the plan year does not transfer to the next year, and you cannot withdraw it. The money is forfeited. This is the core rule that shapes how you should approach FSA planning each year.

The only exception is a small carryover amount that some employers offer. A few plans allow you to carry forward up to $610 (as of 2024, though this amount can change annually) into the next plan year. Not all employers offer this option, and it is entirely voluntary on their part. You need to check your specific plan documents or ask your HR department whether your employer allows a carryover.

Even with a carryover option, the money still does not roll over indefinitely. You either use the carried-over amount in the new year or lose it then. There is no way to preserve FSA funds long-term.

Key Takeaways

  • FSA balances disappear on December 31st each year unless your employer offers a carryover option of up to $610.
  • Carryover is optional for employers and not may provide; you must confirm whether your plan includes it.
  • Even if you can carry money forward, you must spend it within the new plan year or forfeit it.
  • The best strategy is to estimate your actual medical expenses carefully and contribute only what you will realistically use.
  • If you have leftover funds late in the year, you can still submit claims for may be able to access expenses you already paid out of pocket.

Why the use-it-or-lose-it rule exists

The IRS created the use-it-or-lose-it rule to prevent FSAs from becoming a way to save money tax-free indefinitely. FSAs are meant to help you pay for predictable medical costs in the current year, not to accumulate a reserve. If you could carry over unlimited balances, the account would function like a tax-free savings vehicle rather than a spending account for current expenses.

This rule is written into federal tax law, so no employer can override it completely. Some employers have negotiated the carryover option as a middle ground, but that is the only flexibility available.

How to learn about your plan allows carryover

Check your plan documents, usually called the Summary Plan Description (SPD) or the FSA plan rules. Your HR or benefits department can provide this, or you may find it in your employee handbook or benefits portal. Look for language about "carryover," "grace period," or "rollover" — though technically FSAs do not roll over, some plans use that language loosely.

If you cannot find the answer in writing, contact your benefits administrator or HR directly and ask: "Does my FSA plan allow me to carry forward unused funds to the next plan year?" They will tell you yes or no, and if yes, what the limit is.

Do not assume your plan allows carryover just because you have heard of it. Many employers do not offer it, and the only way to know is to ask.

What happens if you have money left over

If you reach the end of the plan year with an unused balance and your plan does not allow carryover, that money is gone. You cannot withdraw it, transfer it, or use it next year. The funds revert to your employer or are used to pay plan administration costs — the specifics vary by plan, but the result is the same: you lose access to it.

If your plan does allow carryover, the unused amount (up to the annual limit) automatically carries to the next plan year. You do not have to do anything. However, you still must use it by the end of that next year, or it is forfeited again.

One strategy to recover some value from leftover funds is to submit claims for may be able to access medical expenses you paid out of pocket earlier in the year. If you have receipts or documentation for expenses you already paid with your own money, you can request reimbursement from your FSA before the deadline. This is a legitimate use of the account and can reduce waste.

How to avoid losing money

The best approach is to estimate your medical expenses conservatively at the start of the year. Look at what you actually spent in the previous year — copays, prescriptions, dental work, vision care, medical equipment — and contribute roughly that amount. If you are uncertain, contribute less rather than more. It is better to leave some tax savings on the table than to forfeit money you cannot use.

Keep track of your spending throughout the year so you know how much you have left to spend. Most FSA providers offer a website or app where you can check your balance. If you see you are going to have leftover funds by October or November, you have time to plan how to use them. You can schedule dental cleanings, vision exams, or other routine care you were planning anyway.

If you have a dependent care FSA (DCFSA) in addition to a medical FSA, remember that they are separate accounts with separate use-it-or-lose-it rules. Do not confuse the two when estimating contributions.

What changes if you leave your job or have a life event

If you leave your job mid-year, you typically lose your FSA balance immediately, even if your plan normally allows carryover. Some employers offer a brief window (usually 60 to 90 days) to submit claims for expenses you incurred while employed, but you cannot carry the balance to a new job or personal account.

If you have a may have access to life event — marriage, divorce, birth of a child, loss of health coverage — you may be able to change your FSA contribution mid-year. However, this does not change the use-it-or-lose-it rule. You still must spend what you contribute by December 31st.

If you reduce your contribution due to a life event, any balance you have already accumulated is still subject to the use-it-or-lose-it rule at year-end.

FSA carryover versus a Health Savings Account (HSA)

If you are frustrated by the use-it-or-lose-it rule, it is worth knowing that a Health Savings Account (HSA) works differently. HSA balances roll over year to year indefinitely, and the money is yours to keep even if you change jobs. However, HSAs are only available if you are enrolled in a high-deductible health plan (HDHP), and not everyone has access to one.

Some people have both an FSA and an HSA, though the rules about which one you can use are strict. If you have an HSA, you generally cannot also have a traditional FSA — you would have a limited-purpose FSA instead, which covers only dental and vision expenses. Ask your benefits administrator whether your plan allows both.

Frequently Asked Questions

Can I roll my FSA balance into an HSA?

No. FSA and HSA are separate accounts with different rules, and you cannot transfer money between them. If you leave your job and lose your FSA, you cannot move the balance to an HSA at a new job. Any unused FSA funds are forfeited when your coverage ends.

What if I don't use my carryover amount in the next year?

If your plan allows carryover and you carry forward unused funds, you must spend that money by the end of the next plan year. If you don't, it is forfeited. The carryover is a one-time extension, not a permanent savings feature.

Can I get my FSA money back if I don't use it?

No. The IRS does not allow FSA funds to be refunded to you as cash or transferred to a personal account. Once the plan year ends, any unused balance is gone. The only way to recover value is to submit claims for may be able to access expenses you already paid out of pocket before the deadline.

Does COBRA coverage keep my FSA active?

No. If you elect COBRA health coverage after leaving your job, your FSA does not continue. You lose access to your FSA balance immediately, though you may have a short window to submit claims for expenses incurred while you were employed.

Can my employer change the carryover amount during the year?

Your employer cannot change the carryover option mid-year for the current plan year. However, they can change it for the next plan year. If your plan currently allows carryover and you are counting on it, confirm the rules for next year before the new plan year begins.