FSA money does not roll over to the next year — you lose what you don't spend by December 31

A Flexible Spending Account (FSA) operates under a "use it or lose it" rule set by federal tax law. Any money you contribute but do not spend on may be able to access medical or dependent care expenses by the end of the plan year is forfeited. You cannot carry the balance forward, request a refund, or transfer it to another account. The money goes back to your employer or the plan administrator.

This rule exists because FSAs are tax-advantaged accounts. You contribute pre-tax dollars, which lowers your taxable income. In exchange, the IRS requires that you actually use the money for its intended purpose within the plan year. The forfeiture rule is the trade-off for the tax savings.

The plan year typically runs January 1 through December 31, though some employer plans use different dates. Your plan documents will state your specific plan year and the deadline for submitting claims.

Key Takeaways

  • Money left in your FSA at the end of the plan year is forfeited — there is no carryover, refund, or transfer option under standard FSA rules.
  • You have until the end of the plan year (usually December 31) to spend the money or submit receipts for expenses already paid out of pocket.
  • A limited grace period or carryover amount may be available under your specific plan, so check your plan documents or contact your plan administrator.
  • Unused money goes back to your employer or plan, not to you, which is why estimating your annual expenses carefully is important.

The Grace Period and Limited Carryover Options

Some employer plans offer a grace period that extends the deadline for spending or submitting claims. A grace period typically allows 2.5 additional months (through March 15 of the following year) to use remaining FSA funds or file claims for expenses incurred during the plan year. Not all plans include a grace period, and it is optional for employers.

A smaller number of plans allow a limited carryover of up to $610 (as of 2024; this amount adjusts annually for inflation). If your plan offers carryover, you can roll that amount into the next plan year. However, most plans do not offer this option, and an employer cannot offer both a grace period and a carryover in the same plan year.

You must review your plan documents or contact your plan administrator to know whether your specific FSA includes either option. Do not assume your plan has a grace period or carryover — many do not.

How to Avoid Losing Money: Timing Your Claims

The key to not forfeiting FSA funds is submitting claims or paying out of pocket for may be able to access expenses before the deadline. You do not have to receive the service or product by December 31 — you only need to incur the expense (have the service performed or purchase the item) by that date. You can then submit the receipt or claim form in early January and still be reimbursed from the prior year's FSA.

For example, if you schedule a dental cleaning for December 15 but receive the bill in January, you can still submit that claim against your prior year FSA funds, as long as the service was performed before December 31.

Some common expenses people time strategically include dental work, vision exams, prescription refills, and over-the-counter medical items. If you know you have unused FSA funds in November or December, scheduling routine care before year-end is a straightforward way to use the money.

may be able to access Expenses You Can Use FSA Funds For

FSA funds can cover a wide range of medical and dependent care costs. Medical FSAs cover copayments, deductibles, prescription medications, dental work, vision care, hearing aids, and many over-the-counter items like pain relievers, allergy medications, and first-aid supplies. Dependent Care FSAs cover daycare, preschool, after-school programs, and summer camps for children under 13 or disabled dependents.

Not all health expenses are covered. Cosmetic procedures, gym memberships, vitamins (unless prescribed), and general wellness products typically do not may have access to. The IRS maintains a detailed list of may be able to access expenses, and your plan administrator can clarify what your specific plan covers.

Keeping receipts and understanding what qualifies helps you spend down your balance strategically before year-end.

What Happens When You Leave Your Job

If you leave your job before the end of the plan year, your FSA coverage usually ends on your last day of employment or your health insurance termination date. Any unused FSA funds are forfeited at that point, regardless of how much you contributed. You do not receive a refund, and you cannot transfer the balance to a personal account or another employer's FSA.

Some plans allow a short grace period (typically 30 to 90 days) after employment ends to submit claims for expenses incurred while you were still employed. Check with your former employer's plan administrator about this window if you have outstanding medical bills.

This is one reason to submit all known claims and receipts as soon as possible if you are planning to leave a job.

Estimating Your FSA Contribution to Avoid Forfeiture

The best defense against losing FSA money is estimating your annual expenses accurately when you enroll. Review the past year's medical and dependent care spending, account for any planned procedures or changes (new glasses, braces, increased daycare), and contribute an amount you are confident you will spend.

If you are unsure, it is safer to contribute less rather than more. You can always pay out of pocket for expenses and then submit the receipt for reimbursement. The tax savings from an FSA are valuable, but only if you actually use the funds.

Life changes — job loss, relocation, change in family size — can make it hard to predict spending. If your circumstances change mid-year, some plans allow you to adjust your contribution during open enrollment or after a may have access to life event. Contact your plan administrator to ask whether a change is possible.

Frequently Asked Questions

Can I get my unused FSA money back as a refund?

No. FSA funds are forfeited if unused by the plan year deadline. The money does not go to you — it returns to your employer or the plan. This is a core feature of the use-it-or-lose-it rule and cannot be overridden.

What if I submit a claim after December 31 for an expense I had in December?

You can submit claims for expenses incurred by December 31 even if you file the claim in January or later, as long as you are within your plan's claim submission window (often 90 days after the plan year ends). The expense date matters, not the claim date.

Does my FSA balance carry over if my employer offers a grace period?

A grace period extends the deadline to spend or submit claims for the current plan year — it does not carry money forward. You still must use the funds by the grace period deadline (usually March 15). Any remaining balance is still forfeited after that date.

Can I transfer my FSA balance to my spouse's FSA?

No. FSA balances cannot be transferred between accounts or to another person, even a spouse. Each FSA is individual to the account holder and the plan year.

What should I do if I have money left in my FSA in November?

Schedule routine medical, dental, or vision care before December 31, or purchase may be able to access over-the-counter items. Keep all receipts. If your plan has a grace period, you have until the grace period deadline to submit claims. Contact your plan administrator to confirm your deadline and what expenses may have access to.