FSA Money Before December 31: A Three-Step Check So It Isn't Forfeited

• Step 1: Find your balance and your plan-year end
• Step 2: Find out which safety net your plan has (if any)
• Step 3: Match the balance to real expenses
• Example
• For next year’s election
• Free tools

Most health FSAs run on a use-it-or-lose-it rule: money left at the end of the plan year is forfeited unless your plan has one of two safety nets. A ten-minute check in November is usually enough to avoid losing anything.

§Step 1: Find your balance and your plan-year end

Log in to the FSA administrator, not just your payroll portal. Note the available balance and the plan-year end date. Many plans end on December 31, but not all.

§Step 2: Find out which safety net your plan has (if any)

A plan can offer one of these, never both:

• Carryover: up to $680 of unused money from a 2026 plan year moves into the next year (the IRS cap; your employer can set a lower one). Anything above that is forfeited.
• Grace period: up to 2 months and 15 days after the plan year ends (to March 15 for a calendar-year plan) to spend the remaining balance.
• Neither: the balance is forfeited at year end.

Also note the run-out period: the deadline for submitting receipts for expenses you already had. It does not give you extra time to spend.

§Step 3: Match the balance to real expenses

Common eligible costs people can plan before year end: eye exams, glasses or contacts, dental work, prescriptions, and many over-the-counter items. Booking appointments now matters more than shopping, because December slots fill up.

§Example

Elected $3,400, spent $2,500, so $900 is unused. With carryover, $680 moves forward and $220 is lost. With a grace period, all $900 can still be spent by March 15. With neither, all $900 is lost on December 31.

§For next year’s election

Look at what you actually spent this year and elect close to that figure. The 2027 health FSA limit rises to $3,500, but a smaller election you fully use beats a larger one you forfeit.

§Free tools

• Paycheck budget calculator: https://smartbudgetsheets.surge.sh/calculators/paycheck-budget-calculator/?utm_source=nostr
• Sinking funds calculator: https://smartbudgetsheets.surge.sh/calculators/sinking-funds-calculator/?utm_source=nostr
• Debt Payoff Planner, up to 8 debts (Payhip): https://payhip.com/b/PtBLU?utm_source=nostr
• 42 free budget templates, pay what you want ($0 is fine): https://smartbudgetsheet.gumroad.com/l/ngpkrb?utm_source=nostr

General information, not financial advice. Figures are rounded examples.