Yes, you can use an FSA to pay last year’s medical bills, but only under specific conditions: the money has to come from last year’s FSA balance, the service must have been performed during that plan year, and you must submit the claim before your plan’s filing deadline closes. What you cannot do is use this year’s fresh FSA contributions to cover care you received last year. The IRS ties every FSA expense to the date the service was delivered, not the date the invoice showed up.
The Date of Service Decides the Plan Year
Under 26 U.S.C. § 125, a health FSA can only reimburse expenses “incurred” during the plan year the funds belong to.1Office of the Law Revision Counsel. 26 USC 125 Cafeteria Plans “Incurred” means the date a provider delivered the care. Not the date you got the bill. Not the date you paid it. A doctor’s visit on December 5 is a December expense forever, even if the statement doesn’t arrive until February.
This trips people up because medical billing is slow. Insurers process claims on their own timeline, and providers often wait for the explanation of benefits before sending you anything. A two- or three-month lag between treatment and invoice is routine. None of that changes which plan year owns the expense. Care received on November 18 belongs to whichever plan year was active on November 18.
Two exceptions are worth flagging because they follow different date rules. Orthodontia is reimbursed based on the date of payment, not the date each individual adjustment is performed, because treatment stretches across many months. And for prescriptions, the fill date the pharmacy stamps is what counts, not the date the package arrives at your door.
The Run-Out Period Is Your Filing Window
Most employer plans include a run-out period after the plan year ends. This is a claim-filing window, nothing more. It gives you extra time to gather paperwork and submit reimbursement requests for expenses you already incurred during the prior plan year. You are not incurring new expenses during this time. You are catching up on old ones.
A typical run-out period lasts 90 days, which puts the deadline for a calendar-year plan at March 31.2Internal Revenue Service. IRS Eligible Employees Can Use Tax-Free Dollars for Medical Expenses The IRS does not mandate a specific length; your employer’s plan document controls the exact date. Some plans give 60 days, others stretch to 120. Check with your benefits administrator, because once the window closes any remaining balance from the prior year is gone.
This is the mechanism that lets you pay last year’s bill. If you received care in October and the invoice finally lands in January, you submit the claim during the run-out period and your prior-year FSA balance covers it. The service happened during the plan year, and you filed before the deadline. Both conditions have to be true.
Why This Year’s Funds Cannot Reach Backward
The IRS draws a hard line. Current-year FSA contributions can only reimburse expenses incurred during the current plan year. Even if you have $2,000 sitting in a brand-new account, you cannot use a penny of it to pay for care you received before the plan year began. The tax-free treatment of FSA contributions depends on this separation. Letting participants reach backward would turn the FSA into an open-ended tax shelter, which is exactly what the rules prevent.
Plan administrators are required to check the date of service on every reimbursement request. If the service date falls before the current plan year started, the claim gets rejected. This is not the administrator being difficult; they have compliance obligations under the cafeteria plan rules, and approving cross-year payments can jeopardize the tax-qualified status of the entire plan.1Office of the Law Revision Counsel. 26 USC 125 Cafeteria Plans
If your prior-year balance is already zeroed out and the run-out period has closed, you are out of FSA options for that old bill. You will have to pay it with after-tax dollars. One partial consolation: if your total unreimbursed medical expenses for the year exceed 7.5% of your adjusted gross income, you may be able to deduct them on your federal tax return using Schedule A.
Documentation You Need to Submit the Claim
Getting reimbursed for a prior-year bill requires paperwork that proves both the timing and the eligibility of the expense. Your plan administrator needs to see the date the service was performed, the provider’s name, a description of the service, and the amount you owe after insurance.3Internal Revenue Service. IRS Memorandum 202317020
The most reliable document is the Explanation of Benefits from your insurance company, because it shows exactly what insurance covered and what remains your responsibility.3Internal Revenue Service. IRS Memorandum 202317020 If you don’t have insurance, or the claim wasn’t submitted to insurance, request an itemized statement directly from the provider. A plain balance-due notice without service dates or procedure descriptions is usually not enough. Gather everything before you submit, because incomplete paperwork is the most common reason reimbursements get delayed or denied inside the run-out period.
Fixing an Accidental Cross-Year Charge
Swiping your FSA debit card for a prior-year expense against your current-year account is a common mistake, especially in January and February when old bills are still arriving. The IRS has a specific correction procedure for improper FSA payments.4Internal Revenue Service. Correction Procedures for Improper Health Flexible Spending Arrangement Payments
Expect this sequence. Your debit card gets temporarily deactivated, and you have to submit future claims manually with receipts until the issue is resolved. Your employer will ask you to repay the improper amount. If you don’t repay voluntarily, they can withhold it from your paycheck to the extent the law allows, or offset it against future legitimate FSA reimbursements. If the debt still isn’t recovered after those steps, the employer may forgive it, but the forgiven amount gets reported as taxable wages on your W-2.4Internal Revenue Service. Correction Procedures for Improper Health Flexible Spending Arrangement Payments
The simplest way to avoid the whole mess: before you pay any medical bill with your FSA card in the first few months of the year, look at the date of service on the statement. If the care happened last year, route the claim through your prior-year account instead. That is the account the expense belongs to, and it’s the only one that can legally pay it.