The FSA year-end spending guide: don't forfeit your own money

A health flexible spending account (FSA) is a great deal with a cruel deadline: you fund it with pre-tax dollars, but any money left over at the plan-year deadline is forfeited — back to your employer, not to you. Americans lose billions of dollars this way every year, most of it in a December scramble or a January realization that the money is simply gone. The fix isn't complicated; it's a calendar habit and a short list of legitimate ways to spend the balance without wasting it.

First: find your actual deadline

Not every FSA ends on December 31. Your employer may offer one of two softeners — but never both, and some offer neither. Know which one you have before you panic:

• Grace period: an extra ~2.5 months (into mid-March) to incur new expenses against last year's balance.
• Carryover: a limited amount (indexed annually, in the $600–$660 range) that rolls into the next year — the rest is still forfeited.
• Neither: a hard December 31 deadline, use-it-or-lose-it in full.
• Run-out period: separate from the above — a window (often into March) just to submit claims for expenses already incurred, not to incur new ones.

Legitimate ways to spend a balance

1. Book the care you've been putting off: dental cleanings and work, eye exams, a dermatology visit, physical therapy, a specialist follow-up.
2. Buy vision hardware: prescription glasses, a backup pair, prescription sunglasses, and a year's supply of contact lenses are all eligible.
3. Refill and stock: prescriptions, and eligible over-the-counter items — many OTC medicines, plus menstrual products, are FSA-eligible without a prescription.
4. Get the equipment you actually need: braces or supports, a blood pressure monitor, first-aid supplies, sunscreen, and more.
5. Schedule the appointment even if the bill comes later — for grace-period plans, what matters is the date the expense is incurred.

One more nuance: the dependent care FSA is different

If you also have a dependent care FSA (for childcare), it has its own separate deadline and rules, and its funds can only be spent on care — you can't shift them to medical expenses. It's forfeitable too, so check that balance and deadline alongside your health FSA. And remember dependent care funds are only available as they accrue from payroll, unlike the health FSA where the full election is available on day one.

The bottom line

An FSA only loses you money if you let the deadline sneak up. Find out whether your plan has a grace period, a carryover, or a hard December 31 cutoff; check your balance on October 1, not in the last week of the year; and spend any remainder on real, eligible needs — care, glasses, contacts, prescriptions, OTC staples. Then, for next year, right-size your election so there's little to scramble over at all.