FSA funds expire at the end of your plan year, and you lose what you don't spend

Your Flexible Spending Account (FSA) money does not roll over to the next year. Whatever you don't use by December 31 (or your plan year end date) is forfeited to your employer—this is called the "use-it-or-lose-it" rule. The only exception is a small carryover amount, which varies by employer plan but is typically $570 for 2024. Any amount above that carryover threshold vanishes.

The deadline is firm. If your plan year ends December 31, you must incur the expense by that date. For claims submitted after the year ends, most plans allow a grace period of 60 to 90 days to submit paperwork for expenses that occurred during the plan year, but the expense itself must have happened before the cutoff.

This is different from a Health Savings Account (HSA), where money rolls over indefinitely and belongs to you. An FSA is an "use-it-or-lose-it" account by design, which is why timing matters.

Key Takeaways

  • FSA funds expire on your plan year end date, usually December 31, and any unspent balance above the carryover amount is forfeited.
  • The carryover limit is set by your employer but typically allows $570 to roll into the next year as of 2024.
  • You have 60 to 90 days after the plan year ends to submit claims for expenses that occurred before the deadline, but the expense date itself cannot be after the cutoff.
  • Dependent care FSAs have their own expiration rules and typically do not allow carryover, so check your plan documents.

How the carryover amount works

If your employer plan includes a carryover provision, you can carry forward up to a set dollar amount—most commonly $570 for 2024, though some employers set lower limits. This carryover sits in your account on January 1 and is available for the new plan year. Any balance above that threshold is lost.

Not all employers offer carryover. Some plans use a "grace period" instead, which gives you an extra 2.5 months (75 days) into the next year to spend down your current-year balance before it expires. A few plans offer both, though that is rare. Check your plan documents or call your benefits administrator to know which option applies to you.

Carryover is separate from the grace period. If your plan has both, you can carry over the allowed amount and then spend it down during the grace period of the new year.

Dependent care FSAs have stricter rules

A Dependent Care FSA (used for childcare, adult day care, or elder care expenses) typically does not allow carryover at all. The entire balance expires on your plan year end date. Some employers do offer a grace period for dependent care FSAs, but carryover is uncommon.

This matters because dependent care expenses are often harder to predict than medical expenses. If you overestimate your childcare costs, you lose the difference. Underestimate, and you pay out of pocket. Review your dependent care spending from the prior year before you elect an amount for the coming year.

What happens to forfeited money

Money you don't use goes back to your employer. Employers can use forfeited FSA funds to pay plan administration costs, reduce premiums for all employees, or cover their own health plan expenses. You do not get a refund, a tax deduction, or any other benefit from the forfeited amount.

This is why the "use-it-or-lose-it" rule creates a real financial incentive to spend down your balance before the deadline. If you have $500 left in your medical FSA on December 15, you are choosing between spending it on may be able to access expenses or losing it entirely.

How to avoid losing money before the deadline

Track your FSA spending throughout the year. Most employers provide an online portal where you can see your balance and submitted claims in real time. Check it monthly so you know how much you have left.

In November and December, review what you have spent and what remains. Common may be able to access expenses you can use up include prescription refills, over-the-counter medications (with a prescription), dental work, vision care, hearing aids, and medical equipment like crutches or blood pressure monitors. If you wear glasses or contacts, December is a good time to order a new pair or stock up on supplies.

Do not wait until December 31 to spend. Many providers and pharmacies are closed or have reduced hours at year-end, and claims submitted after the deadline may not be processed in time. Aim to incur expenses by mid-December so you have time to submit paperwork if needed.

Submitting claims after the plan year ends

Most FSA plans allow a claims run-out period of 60 to 90 days after the plan year ends. This means you can submit a claim for an expense that occurred in 2024 as late as February or March 2025, as long as the expense date itself was before December 31, 2024.

You will need documentation: a receipt, an explanation of benefits (EOB) from your insurance, or an invoice from the provider. Keep receipts for any FSA expenses, especially those you pay out of pocket and plan to reimburse yourself for later.

After the claims run-out period closes, no more claims from the prior year will be accepted. Any expenses you did not submit by then cannot be reimbursed, even if they occurred before the deadline.

Planning your FSA election for next year

Use this year's spending to estimate next year's election. If you consistently have money left over, elect a lower amount. If you run out before December, elect more. FSA elections are set during open enrollment and cannot be changed mid-year unless you have a may have access to life event (birth, marriage, loss of coverage, significant change in dependent care costs).

For medical FSAs, the IRS sets an annual contribution limit—$3,300 for 2024, though this changes yearly. For dependent care FSAs, the limit is $5,000 per household per year. Your employer may set a lower limit, so check your plan documents.

Be conservative if you are unsure. It is better to elect less and pay some expenses out of pocket than to forfeit money you cannot use.

Frequently Asked Questions

Can I transfer my FSA balance to an HSA?

No. FSA and HSA are separate accounts with different rules. You cannot move FSA money into an HSA. However, if you leave your job or lose FSA coverage, you may be able to open an HSA if you enroll in a high-deductible health plan. The HSA starts fresh with no carryover from your FSA.

What if I leave my job before my FSA expires?

Your FSA coverage typically ends on your last day of employment. Any unspent balance is forfeited, even if it is only November. You have a short window (usually 60 to 90 days) to submit claims for expenses you incurred while employed, but the balance itself does not transfer to a new employer's plan or to you personally.

Does the carryover amount reset each year?

Yes. If your plan allows a $570 carryover, you can carry over up to $570 from 2024 to 2025, and up to $570 from 2025 to 2026, and so on. The carryover limit resets annually. Any amount above the limit is still forfeited.

Can I use my FSA for my spouse's medical expenses?

Yes, if your spouse is covered under your health plan. You can use your FSA to pay for may be able to access medical expenses for yourself, your spouse, and any tax dependents, regardless of whether they are on your insurance. The expense must be may be able to access and you must have receipts.

What counts as an may be able to access FSA expense?

may be able to access expenses include prescription medications, copays, deductibles, dental work, vision care, hearing aids, medical equipment, and certain over-the-counter items (with a prescription). Cosmetic procedures, gym memberships, and general wellness products do not count. Your plan documents list what is covered under your specific plan.