The Flexible Spending Account ‘Use It or Lose It’ Rule and FSA Deadline

Key takeaways:

• Under the “use it or lose it” rule, FSA funds left unspent at the end of your plan year may be forfeited. For many people, that’s December 31, 2026.
• Your employer may offer a carryover (up to $680 into 2027) or a grace period of up to two and a half extra months, but not both. And they don’t have to offer either.
• Check your plan details with your FSA administrator now, and put your remaining funds to work on eligible products and services before time runs out.

Did you forget about your flexible spending account (FSA)? As you prep for the holiday season, it’s easy to overlook the upcoming FSA deadline. 

The good news is there’s still time to use your leftover funds before December 31, 2026, if that’s your plan’s deadline. (Check with your FSA administrator to be sure.) It’s best not to wait until the last minute, so now is a great time to take stock of your account.

Here’s how the FSA deadline works and how to prevent a last-minute scramble to spend down your balance.

What Is the Use It or Lose It Rule?

The “use it or lose it” rule is the IRS rule that makes FSA planning a little different from other savings accounts. FSA funds are set aside tax-free for eligible healthcare expenses during a plan year. And unlike an HSA, any FSA money left over at the end of that plan year may be forfeited to your employer.

That’s what makes the year-end FSA deadline so important. For plans that follow the calendar year, the deadline is December 31. Once it passes, unspent funds are generally gone unless your employer’s plan offers a carryover or grace period (more on that below). Plan years can vary by employer, so your own deadline may be different. Your FSA administrator can confirm your exact date.

Does My FSA Have a Grace Period?

It depends on your employer. Employers have several options when offering an FSA. They can allow up to $680 in unused FSA funds (for plan years ending in 2026) to carry over to the next year, or they can allow a grace period extension. The grace period gives FSA holders two and a half additional months to use their FSA after the plan year ends. For a calendar-year plan, that means through March 15, 2027.

But employers can’t offer both options, and they don’t have to offer either one. It’s best to contact your FSA administrator to find out the details of your plan and whether it offers a carryover or grace period.

For more on what you can buy and when, visit our FSA Learning Center or check the FSA Store® deadline page.

How to Avoid Forfeiting Your Funds

FSAstore.com offers an easy solution for FSA participants. We exclusively sell 2,500+ FSA eligible products, and we offer free tools—including our deadline spender tool—to help you manage and utilize your FSA. A few suggestions to make the most of your funds:

• Browse Surprisingly Eligible™ products. From over-the-counter and skincare brands you love, to hi-tech health tools, you’d be surprised by how much your FSA actually covers in this curated FSA eligible assortment.
• Use your FSA for services and telehealth. You can find FSA eligible service providers and discover which services qualify (LASIK, dental care, chiropractic care, weight loss and more). You can also use your FSA for co-pays, co-insurance, and deductibles at your next doctor visit.
• Estimate your expenses during open enrollment. If your life circumstances have changed (you got married, switched jobs, or are expecting a baby), so will your FSA needs.
• Get answers. Our FSA Learning Center and blog can help with any questions about your account.

Wrapping Up

The “use it or lose it” rule means unspent FSA funds may be forfeited when your plan year ends, which for many people is December 31, 2026. Some plans soften that with a carryover of up to $680 or a grace period of up to two and a half months, but employers can’t offer both and don’t have to offer either. 

Confirm your plan’s rules with your administrator, then put your remaining funds to work at FSAstore.com, where if it’s in your cart, it’s FSA eligible, guaranteed!