Does an FSA Transfer to a New Employer? COBRA, Run-Out, and HSA Rules

No, a flexible spending account does not transfer to a new employer. An FSA belongs to the employer that sponsors it, not to you, so when you leave a job the account stays behind. You can sometimes buy more time to use the balance through COBRA, and you can open a fresh FSA at your new workplace, but there is no mechanism to move the money from one company’s plan into another’s.

Why the Account Stays Behind

Under federal tax law, an FSA is a feature of a cafeteria plan established and maintained by your employer. It is not a personal account you own. That is the structural reason it cannot follow you: there is no legal path to roll an FSA balance into another company’s plan the way you would roll over a 401(k).

A health savings account is different. You personally own an HSA and can move it between custodians regardless of employment status. An FSA gives you no such ownership, and once your employment ends any balance you haven’t spent belongs to the former employer unless you act before it disappears.

What Happens to Money You Haven’t Spent

Your ability to incur new FSA-eligible expenses ends on your last day of coverage, which is usually your last day of employment. Medical costs after that date cannot be reimbursed from the old account. Whatever you haven’t spent is forfeited, subject to two possible exceptions covered below: the run-out period for claims from before you left, and COBRA continuation coverage.

One rule works strongly in your favor if you spent aggressively before leaving. Under the uniform coverage rule, your full annual FSA election is available from day one of the plan year, even though payroll deductions happen gradually. Say you elected $3,400, spent $2,800 on a dental procedure in February, and quit in March after contributing only $800 through payroll. You keep the $2,800. Your former employer cannot claw it back and absorbs the shortfall.

The Run-Out Period for Pre-Departure Claims

Most FSA plans include a run-out period after your last day. This window lets you submit reimbursement claims for expenses you incurred while still employed. It does not let you incur new expenses. It only gives you extra time to file paperwork for services that already happened during your coverage.

Run-out windows typically last 60 to 90 days, though the exact length is set by your employer’s plan document. To file a successful claim you need itemized receipts or an Explanation of Benefits showing the date of service, provider name, and amount paid. Credit card statements and canceled checks alone usually don’t meet the documentation standard. Missing the run-out deadline means permanent forfeiture, so put the date on your calendar the day you leave.

A note on carryover and grace periods: some plans let participants carry over up to $680 for 2026, and others offer a grace period of up to two and a half months to spend down the prior year’s balance.¹ These features generally only help you if you remain a participant. Leaving the company usually forfeits both.

Can COBRA Keep Your FSA Alive?

COBRA can extend your health care FSA past your last day, but only when the math works out. Your former employer is required to offer COBRA for the FSA only if your account is “underspent” at the time you leave. An account qualifies as underspent when the remaining benefit you could still receive for the rest of the plan year is greater than the total COBRA premiums you would pay for that same period.² If premiums would exceed the remaining balance, there is no economic benefit and the employer has no obligation to offer continuation.

Running the Numbers

Suppose you elected $3,400, spent $1,000, and left in June with six months remaining in the plan year. Your remaining benefit is $2,400. The maximum COBRA premium the employer can charge is your annual election ($3,400) divided by 12, plus a 2 percent administrative surcharge, multiplied by the months left.³ If six months of premiums come in below $2,400, the account is underspent and COBRA must be offered. If premiums exceed $2,400, electing doesn’t make financial sense even if offered.

Timing and Taxes

After a qualifying event like job loss, your former employer must send a COBRA election notice. You have 60 days to decide.⁴ Unlike your original FSA contributions, COBRA payments are made with after-tax dollars, so you lose the tax advantage that made the FSA valuable in the first place.

COBRA for a health care FSA generally lasts only through the end of the plan year in which the qualifying event occurred, not the standard 18-month window that applies to medical and dental coverage. If you leave in October, you may only get two or three months of continued access. That short runway is another reason to run the underspent calculation carefully before electing.

If Your Employer Was Small

Federal COBRA applies only to employers with 20 or more employees. If your former employer was smaller, federal COBRA won’t be available. Many states have their own continuation coverage laws that reach smaller employers, though thresholds and duration vary widely.

Opening an FSA at the New Job

Starting a new job counts as a qualifying life event, so you can enroll in your new employer’s FSA without waiting for open enrollment. You’ll make a fresh salary reduction election covering the rest of the year.

Watch out for a common misconception here. Many people believe the annual FSA limit “resets” at a new employer, letting you contribute the full amount again even if you already maxed out at the old job earlier in the same year. The statute caps salary reduction contributions to a health FSA “for any taxable year” at the indexed limit, which is $3,400 for 2026, and that language does not say “per employer.”⁵¹ Your new employer’s plan administrator won’t know what you contributed at the old job and will likely let you elect the full amount, but that doesn’t make it compliant.

If you left early in the year and contributed very little, this distinction barely matters. If you maxed out $3,400 through August and then elected another $3,400 in September, you’d hit $6,800 for the year. The safer approach is to reduce your new election by whatever you already contributed at the prior job during the same calendar year.

Coordinating an Old FSA With a New HSA

If your new employer offers a high-deductible health plan with an HSA, be careful about how the old FSA interacts with it. An active general-purpose health care FSA disqualifies you from making HSA contributions. That includes leftover money from a prior employer’s FSA sitting in a grace period, and even a spouse’s general-purpose FSA that could reimburse your medical expenses.

A limited-purpose FSA, which only reimburses dental and vision costs, does not disqualify you from an HSA. If your new employer offers both, you can use them together.

If you elected COBRA for your old employer’s general-purpose FSA, you’re generally HSA-ineligible for the months COBRA coverage is in effect. HSA eligibility is determined monthly, so you become eligible the first month after that COBRA FSA coverage ends. Timing the transition matters.

Dependent Care FSAs Follow Different Rules

Dependent care FSAs are not covered by COBRA, because those benefits are not “medical care” under the statute.⁴ You cannot continue a dependent care FSA after employment ends. You can still submit claims during the run-out period for eligible expenses that were incurred while you were participating. There is also no uniform coverage rule for dependent care FSAs, so at any point you can only be reimbursed up to what you’ve actually contributed through payroll.

What to Do Before Your Last Day

The best time to handle your FSA is before you walk out the door. A few practical moves protect the money you’ve already earned:

Log into your FSA portal and compare contributions against spending. If you have a surplus, schedule eligible expenses now: contact lenses, prescriptions, dental cleanings, glasses.
Ask HR or your plan administrator, in writing, exactly how many days you have after termination to submit claims.
If your balance is meaningful, run the COBRA underspent calculation. Only elect if the remaining benefit exceeds the premiums.
Gather itemized receipts, Explanation of Benefits statements, and copies of claims you’ve already submitted, in case you need them during the run-out period or if the IRS asks later.⁶
Write down your year-to-date FSA contributions. You’ll need that number to figure your remaining contribution room at the new job, since the annual limit applies across all employers for the tax year.¹

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
GovInfo. 26 CFR 54.4980B-2 – Plans That Must Comply
3
DOL.gov. FAQs on COBRA Continuation Health Coverage for Employers and Advisers
4
U.S. Department of Labor. An Employee’s Guide to Health Benefits Under COBRA
5
Office of the Law Revision Counsel. 26 USC 125 – Cafeteria Plans
6
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans