🚀 Fast Facts: The FSA “use it or lose it” rule explained
- Flexible Spending Account (FSA) funds are meant to be spent within the plan year, so any unspent funds expire
- The “use it or lose it” rule ensures that FSA funds are spent within their respective benefits period
- Your plan may let you carry over up to $680 of unused 2026 funds into 2027, or give you a grace period of up to 2½ months, but not both
“Use it or lose it.” You’ve heard the term applied to your Flexible Spending Account, but what does it mean? Well in 2023, it’s estimated that U.S. workers forfeited $4.5 billion dollars in unspent FSA contributions, which means they’re losing value from their annual income.
Does your FSA roll over? Only partly, and only if your employer’s plan allows it. A health FSA can let you carry over a capped amount of unused money into the next plan year (up to $660 of 2025 money into 2026, and up to $680 of 2026 money into 2027), or give you a grace period of up to 2½ months to keep spending last year’s balance, but not both. If your plan offers neither, any FSA money left at the end of the plan year is forfeited.
To avoid losing your FSA dollars, we’ll cover all the essential information you need, including:
- What is the IRS FSA “use it or lose it” rule?
- Does your FSA roll over? How the FSA carryover option works
- FSA grace period: extra time to spend leftover funds
- How FSA fund expiration works
- 5 tips for using FSA dollars before you lose them
- 26 popular products and services to use your FSA on before you lose it
Let’s start with how the rule works and when unused FSA money expires.
What is the IRS Flexible Spending Account (FSA) “use it or lose it” rule?
The Flexible Spending Account (FSA) “use it or lose it” rule means health FSAs, which the IRS calls health flexible spending arrangements, are meant to be used within the plan year. Any funds still unused when the plan year ends are forfeited to your employer, unless your plan has a carryover provision or a grace period.
Is an FSA “use it or lose it”?
Yes. Flexible Spending Accounts (FSAs) are designed to be used within the plan year. The “use it or lose it” rule applies to both health FSAs and dependent care FSAs: leftover funds are forfeited to your employer, except for any carryover or grace period your plan offers.
Does your FSA roll over? How the FSA carryover option works
Your FSA rolls over only if your employer’s plan includes a carryover provision, which the employer adds through a plan amendment. A carryover lets you move a limited amount of unused funds from the prior plan year into the following plan year. The Internal Revenue Service sets the maximum carryover amount each year and adjusts it for inflation, but your employer decides whether to offer a carryover at all and can set a lower limit. Carried-over money doesn’t count against your contribution limit for the new plan year.
The IRS limit applies to the plan year the unused money comes from. Here is how it has changed:
Unused money from plan year | Maximum carryover into the next plan year |
2021 | $550 |
2022 | $570 |
2023 | $610 |
2024 | $640 |
2025 | $660 (into 2026) |
2026 | $680 (into 2027) |
Carried-over money is added to your balance for the next plan year. Whatever is still unused at the end of that year is again subject to your plan’s carryover rules, and anything over the limit is forfeited.
How much of my FSA can I carry over to 2026 and 2027?
If your plan year follows the calendar year and your plan has a carryover option, you can carry up to $660 of unused 2025 money into 2026, and up to $680 of unused 2026 money into 2027 (IRS Rev. Proc. 2025-32). The IRS usually announces the next year’s limit in late October or November.
Does an FSA carryover affect HSA eligibility?
It can. If unused money carries over into a general-purpose health FSA, you can’t contribute to a health savings account (HSA) for that entire following plan year. Carrying it into a limited purpose FSA, which only covers dental and vision care, keeps you HSA-eligible, and some plans let you decline the carryover. IRS Publication 969 has the details.
FSA grace period: extra time to spend leftover funds
An FSA grace period gives you up to 2½ extra months after the plan year ends to incur eligible expenses and pay for them with your prior year’s balance. For a calendar-year plan, that means you can keep spending your 2026 balance on care and products bought through March 15, 2027. Like the carryover, a grace period is optional: your employer decides whether to offer one, and it can be shorter than 2½ months.
A grace period can also affect HSA eligibility. If you’re covered by a general-purpose health FSA during a grace period, you can’t contribute to an HSA for those months unless your FSA balance was $0 at the end of the plan year.
Carryover vs. grace period: can your plan have both?
No. Health FSAs can offer a carryover or a grace period, not both, and many plans offer neither. A carryover moves a capped amount into the whole next plan year. A grace period lets you spend your entire leftover balance, but only for up to 2½ months. Check your plan documents or benefits portal to see which one you have.
What is an FSA runout period?
An FSA run out period is the time you have to submit claims for expenses incurred during the plan year (or grace period). Your plan sets the length, but 90 days after the end of the plan year is common. A run out period doesn’t give you more time to spend; it only gives you time to file claims for what you’ve already bought.
What about dependent care FSAs?
Yes, the “use it or lose it” rule also applies to a Dependent Care FSA (DCFSA), as this account is also designed to be spent within a fiscal year.
Dependent care FSAs can’t carry over unused money, but your employer can offer a grace period of up to 2½ months. For 2026, the dependent care FSA limit rises to $7,500 per household ($3,750 if married filing separately).
How FSA fund expiration works
Now that you understand the rule, here’s how it applies to your FSA and when your funds expire.
Why do FSA funds expire?
FSAs are funded with salary reduction contributions: pre-tax funds taken from your paycheck, which lower your taxable income. In exchange for that tax break, the Internal Revenue Service requires the money to go toward qualified medical expenses within a single plan year, which is why unused funds expire.
In contrast, an HSA is a long-term tax-advantaged account for medical expenses. Health savings accounts let you invest your balance and grow it over time. HSAs have annual contribution limits too, but unlike an FSA, HSA money never expires and can go toward qualified medical expenses at any time.
When do FSA funds expire?
While most FSA funds work on a calendar year timeline, running from January 1st to December 31st, they can have any start date as defined by your plan administrator. This means your FSA funds will likely expire at the end of the year.
Some plans may run on a different plan year timeline, like from an employee’s start date, or run on the company’s fiscal year. And other provisions in your plan like the grace period or carryover period can extend the actual period of time (the dates) where you can submit expenses, into your next plan year.
Do you lose FSA money at the end of the year?
Unused FSA money is forfeited when your plan year ends, which is often December 31st, unless your plan offers a grace period or carryover option that extends into the new plan year.
However, when you’ve exhausted any provisions for your FSA like the grace period or carryover period, any unspent money will be forfeited.
Where does FSA money go when you lose it?
Forfeited FSA money goes back to your employer. Employers can use it to cover the cost of running the plan or share it among all plan participants, but they can’t refund your own unused balance to you. In effect, it’s part of your pay that you set aside and never used.
How to check when your FSA funds expire
If you have an FSA through your employer, you most likely have an online portal where you can view your plan details, including your current remaining balance, and any rollover amounts. Here, you should also be able to find details about when your plan year ends, along with any benefits you have that may entitle you to provisions that help you spend FSA dollars into next year.
If you don’t have an online portal you can log in to, you should review any documentation you were given when you started the FSA, and you can always check with your FSA administrator or HR representative to get details about your FSA plan.
5 tips for using FSA dollars before you lose them
If you have a balance left as the FSA deadline approaches, here are some practical ways to use it:
1. Check online retailers with FSA eligibility to shop instantly
Some online shops are set up with a checkout that allows you to pay for their products with your FSA account or card directly at the checkout. Simply select that option at checkout, and you can purchase the product using your FSA. This cuts out reimbursement work, and shortens your timeline for getting a product purchased.
Like in the example above with Forme’s posture-correcting t-shirts, you can pay for the product directly with your FSA at the checkout. Look for this symbol while shopping, or checkout any of the stores in Flex’s Shop to find more options where you can pay for products with your FSA at checkout.
2. Shop at in-person stores and get reimbursed later
You can also shop in person and submit claims for reimbursement later. Medicine-cabinet staples and everyday eligible items like sunscreen can often be bought with an FSA card or reimbursed with a receipt.
3. Learn about LMNs to cover items that can help with qualifying conditions
Some FSA-eligible products and services require a Letter of Medical Necessity (LMN) before purchase. A gym membership for example is a long-term higher cost service, but an FSA can be used to cover a gym membership if you have an LMN.
PRO TIP: If needed, Flex allows consumers to obtain a Letter of Medical Necessity service during checkout, so you can purchase the product you need. 24-hour Fitness for example has an online consultation that takes only minutes, and can email you an LMN within 2 hours if you qualify.
Getting an LMN at checkout saves time and helps you use your remaining balance without roadblocks.
4. Look for surprising items you might not have known you can use an FSA for
Many people are surprised by the items that can be eligible for reimbursement with your FSA, especially if you can get a Letter of Medical Necessity before purchasing it. These are the top 10 items we find people the most surprised you can use an FSA for (hint: click each link for a full rundown on when these items are HSA/FSA-eligible):
- Sunscreen (with SPF 15+)
- Semaglutide injections (with a prescription)
- Many baby care essentials and prenatal care items
- Body composition scales
- Red light therapy devices for skincare
- Fitness programs, services, and apps
- Protein powder
- Electrolytes
- Saunas
- Blue light glasses
5. Find creative ways to spend the FSA funds
There are some strategies you can use to spend your FSA before it expires this year that you might not have thought of, especially if you’re working through a carried-over balance.
- Schedule appointments you’ve been putting off - Like dental cleanings, or that bigger dental surgery you’ve been procrastinating on
- Spend the funds on your family - A lot of FSAs allow for spouse, children, or dependent spending, so consider the things they need as well
- Look for big ticket items that benefit the whole house - Bigger exercise equipment or vacation supplies can help spend down FSA money faster
- Enable your resolutions and goals - Especially if your balance is expiring at the end of the year, purchase items that will help with your new year health goals
- Stockpile the medicine cabinet with essentials - If supplies are running low, don’t wait until the next year—these smaller-cost items can really add up, and you were going to buy them anyway when they run out
26 popular products and services to use your FSA on before you lose it
One of the easiest ways to use your FSA before the deadline is to buy eligible items from online shops that let you pay directly with your FSA card at checkout and can provide a Letter of Medical Necessity (LMN) for items that need one.
It’s fast when time is short, and it gives you more options than shopping in person. Check out the Flex Marketplace for hundreds of brands with FSA-eligible products you can buy online, or here are some of our favorite online stores that offer FSA-eligible products:
Fitness and exercise products, services, and apps
Product | Description |
 | A global leader in at-home pilates reformer equipment and education. |
 | Road-ready bikes for cycling enthusiasts, built by cycling experts. |
 | A wearable biosensor that provides personalized hydration data — scientifically validated and delivered in real time. |
 | A personalized workout app that takes the guesswork out of your workouts. |
 | Attach this device to your own fitness equipment to enhance your workouts. |
 | Build your own space-saving at-home workouts with these adjustable dumbbells. |
 | See even better results on your GLP1 weight loss journey with this telehealth coaching program. |
Home wellness products, clothing, and footwear
Product | Description |
 | Posture-correcting clothing including shorts, scrubs, leggings, bras, and more. |
 | These personalized insoles and sandals are custom-built to support your foot’s contours. |
 | An air purifier with innovative TPA® technology, designed to efficiently remove pollutants from the home. |
 | Achieve calm in 3-minutes with this drug-free anxiety treatment solution. |
 | An advanced form of vibration therapy using high-frequency oscillations to alleviate muscle tension. |
 | Get workout recovery, edema, and vein relief with this advanced at-home compression therapy system. |
 | Supports healing, growth, and transformation with this bilateral stimulation device. |
Supplements, nutrition, and general health products
Product | Description |
 | A proprietary blend of five potent seaweed species to support thyroid, hormone, and gut health. |
 | Physician-formulated supplements that support overall health and nutrition. |
 | A lifestyle and wellness health app proven to help those with challenging schedules or lack of energy. |
 | Superfood-based natural nutrition that helps ease menstrual and menopausal symptoms. |
Sleep wellness products
Product | Description |
 | Pillows, sheets, and bedding that’s actually made for how you sleep. |
 | White noise machines and smart fans to help you get a restful, uninterrupted sleep. |
 | Air-based technology for your bed that can heat and cool your bed to the ideal temperature. |
 | Stop snoring with this mouth tape and nose strips that actually stay on all night. |
 | Custom-built blackout shades made to fit your space and give you a better night’s sleep. |
Skincare products
Product | Description |
 | Luxury skincare products and daily essentials like sunscreen that leave you with radiant skin. |
 | Red light therapy mask that treats fine lines, wrinkles, redness, pigmentation, acne, and more. |
 | Founded in 1872 in Ginza, Tokyo, and is one of the world’s biggest names in Skincare. |
Knowing how your plan works, including any carryover option, grace period, and run out period, is the best way to avoid forfeiting FSA money. If you’re short on time with a large balance in your FSA account, make sure to check out the Flex Marketplace for hundreds of online retailers and services that offer FSA-eligible products you can purchase online.
