FSA Use-It-or-Lose-It: Your December Checklist

If you have money left in a health flexible spending account (FSA), December is when you find out how much of it you’ll keep. Depending on your plan, unused money may carry over, get a grace period or simply be forfeited. Spend 15 minutes checking your balance and your plan’s rules now, then use what’s left on care and supplies you actually need.

How use-it-or-lose-it actually works

A health FSA lets you set aside pre-tax money from your paycheck for eligible medical expenses. For 2026, the maximum you can contribute is $3,400. The trade-off for the tax break is that, as a general rule, money you don’t use by the end of the plan year is forfeited to your employer.

Employers can soften that rule in one of two ways, or not at all. Your plan picks one of these:

Your employer chooses which option to offer, and can set a lower carryover amount or a shorter grace period than the maximum. Check your summary plan description, your benefits portal or your FSA administrator’s website.

Don’t confuse the run-out period with spending time

Most FSA plans have a claims run-out period, often a few months after the plan year ends. It’s the deadline for submitting receipts for expenses you already had during the plan year (or grace period). It doesn’t give you more time to buy things.

For example: you get new glasses on December 20, 2026, and pay out of pocket. If your plan has a run-out period through March 31, 2027, you can submit that receipt in February and get reimbursed. But glasses you buy in February 2027 count against your 2026 funds only if your plan has a grace period.

What you can use FSA money for

FSAs cover qualified medical expenses, which follow IRS rules (IRS Publication 502 describes medical expenses in general). Your plan can be narrower than the IRS allows, so check your administrator’s eligible expense list before you buy. Common eligible categories include:

• Doctor and hospital costs: copays, coinsurance and deductibles for covered care
• Prescriptions
• Over-the-counter medicines like pain relievers, allergy and cold medicine. These don’t need a prescription to be eligible, a change made by the CARES Act.
• Menstrual products like pads, tampons and cups, also made eligible by the CARES Act
• Vision: eye exams, prescription glasses, prescription sunglasses and contact lenses
• Dental: cleanings, fillings, crowns and orthodontics (cosmetic procedures like whitening generally don’t qualify)
• Hearing: hearing exams and hearing aids
• Medical supplies: bandages and first aid supplies, thermometers, blood pressure monitors, crutches, diabetic testing supplies
• Mental health care from qualified providers

Some items fall in a gray area or need a letter of medical necessity from your doctor. If you’re not sure, ask your FSA administrator before spending.

Your December action list

1. Check your balance today. Log in to your FSA account and note what’s left, including any pending claims.
2. Find your plan’s rules. Does it offer a carryover, a grace period or neither? What’s the run-out deadline? Write all three down.
3. Submit receipts you already have. Copays, prescriptions and pharmacy purchases from earlier in the year are easy to forget. Submit them first, because this is money you already spent.
4. Book care you were going to get anyway. An eye exam, a dental cleaning, a follow-up visit or a refill you’ve been putting off. If you’ve also met your health plan deductible this year, that care may cost even less before it resets on January 1.
5. Replace what you genuinely use. New glasses or contacts if your prescription is current, a reasonable supply of OTC medicines you take regularly, or a first aid kit refresh.
6. Save every receipt. Keep itemized receipts showing what you bought, when and how much. Card swipes sometimes need backup documentation.
7. Set your 2027 election carefully. If you’re forfeiting money this year, consider contributing less next year. If you used it all by October, consider more.

What NOT to do

The goal is to avoid losing money, not to spend it for the sake of spending it.

• Don’t stockpile things that will expire. Five years of allergy medicine you won’t use before it expires isn’t a savings. It’s forfeiting money slowly.
• Don’t buy gadgets you won’t use just because a site labels them “FSA eligible.” Ask yourself whether you’d buy it with your own money.
• Don’t get unnecessary medical care to burn a balance. Appointments and procedures carry their own risks and follow-up costs.
• Don’t assume a store’s “FSA eligible” label is accurate for your plan. If a claim is denied, the money doesn’t come back.
• Don’t forget the run-out deadline on purchases you’ve already made.

FSA vs. HSA, and a 2027 wrinkle

A health savings account (HSA) works differently. The money is yours, it rolls over year after year, and it stays with you if you change jobs. But you can only contribute if you have an HSA-eligible health plan. Our HSA vs. FSA guide explains the differences, and the HSA calculator helps you estimate the value.

If you’re moving to an HSA-eligible plan in 2027, be careful. A general-purpose health FSA carryover or grace period can affect whether you’re allowed to contribute to an HSA in the new year. Some employers handle this by offering a limited-purpose FSA (dental and vision only). Ask your benefits administrator how your plan handles it before you elect.

Leaving your job soon? FSA money generally can’t be used after your coverage ends unless you continue it through COBRA, so plan your spending and claims before your last day. Our guides to insurance when you quit and switching jobs have more.

This is general education. For questions about your specific plan, check with your FSA administrator or HR, and talk to a tax professional about tax questions.

Frequently asked questions