What Happens to My FSA If I Change Jobs? COBRA and Carryover

When you change jobs, your Flexible Spending Account stops covering new medical expenses on your last day of employment, and any unused balance is forfeited unless you qualify for and elect COBRA continuation coverage. You still have a short window after leaving to submit claims for expenses you incurred while employed, but new expenses generally cannot be reimbursed once your coverage ends. What happens to your FSA if you change jobs depends on the type of account, how much you have spent versus contributed, and whether your former employer is large enough to be subject to COBRA.

When Your Health FSA Coverage Actually Ends

Most plans cut off health FSA coverage at midnight on your last day of work. Some extend it through the last day of the calendar month. Your plan document controls which rule applies.

The date that matters is when the medical service is performed, not when you receive the bill or pay it. A doctor visit on your final working day is eligible. The same visit one day later is not, even if hundreds of dollars remain in the account. If you have a departure date on the calendar, schedule any planned care before it arrives.

The Run-Out Period for Submitting Claims

You cannot incur new expenses after coverage ends, but you can still file claims for services you received while employed. This filing window is called a run-out period, and most plans set it at 30 to 90 days after termination. Your plan’s Summary Plan Description spells out the exact deadline. Miss it, and access to those funds is gone permanently.

A run-out period is not the same as a grace period. A grace period, offered by some plans at the end of a plan year, lets you incur new eligible expenses for up to two and a half extra months after the plan year closes.¹ A run-out period only gives you extra time to submit paperwork for care you already received during active coverage.

What Happens to Carryover Balances

Many employers let you roll over a portion of unused health FSA funds from one plan year to the next. For 2026, the maximum carryover is $680.² That carried-over money may already be sitting in your account when you leave.

Carryover does not survive termination. Any remaining balance in your health FSA, including carryover from the prior year, is forfeited when your employment ends unless you elect COBRA. A plan that offers carryover cannot also offer a grace period for health FSA funds; the two features are mutually exclusive.³ And nothing transfers to a new employer’s FSA. Whatever you leave behind is lost.

If You Spent More Than You Contributed

Health FSAs work differently from a savings account. Under the uniform coverage rule, your full annual election must be available for reimbursement on day one of the plan year, no matter how little you have contributed through payroll deductions so far.⁴ If you elected $3,400 for the year, you could spend all of it in January.

If you leave after spending more than you have contributed, your employer cannot deduct the difference from your final paycheck or send you a bill for the shortfall.⁴ In that scenario, you come out ahead by leaving.

Keeping Your Health FSA Through COBRA

COBRA can let you keep spending your health FSA after you leave, but only if several conditions line up. COBRA applies only if your former employer had 20 or more employees on a typical business day during the prior calendar year.⁵ Smaller employers are not subject to federal COBRA, though some states have mini-COBRA laws that may provide similar coverage.

Your Account Has to Be Underspent

Even at a COBRA-covered employer, your health FSA qualifies for continuation only if it is “underspent.” That means your remaining balance (annual election minus reimbursements already received) is greater than the total COBRA premiums you would owe for the rest of the plan year. If you have already spent more than you contributed, or if the remaining balance would not exceed premiums through year-end, your employer has no obligation to offer COBRA on the FSA.

Cost, Duration, and Election Deadline

If your account qualifies, you pay the full cost of coverage plus an administrative fee of up to 2%, for a total of up to 102% of the plan cost.⁶ Those payments are made after tax, so the pre-tax advantage you had as an employee is gone.

COBRA for a health FSA also runs only through the end of the current plan year, not the 18 months available for other COBRA benefits. If you leave in October and your plan runs on a calendar year, COBRA gets you access to the FSA only through December 31. You have 60 days after your employer-sponsored coverage ends to elect COBRA.⁷ Miss the deadline and the remaining balance is forfeited.

When It Is Worth Electing

COBRA on a health FSA makes financial sense only when the balance you can still access exceeds the after-tax premiums you would pay to keep it. A large mid-year balance paired with planned medical spending (a dental procedure, new glasses, ongoing prescriptions) is usually worth continuing. A small balance with several months of premiums standing between you and year-end usually is not.

Dependent Care FSAs Follow Different Rules

A dependent care FSA is not subject to the uniform coverage rule. Your employer is required to reimburse only up to what you have actually contributed through payroll deductions, not the full annual election.⁴ Because there is no early-overspending risk for the employer, termination works differently.

Many plans let former employees submit claims for eligible dependent care expenses (daycare, preschool, before- and after-school programs, summer day camp) that were incurred while employed, filed during the run-out period. Whether you can also claim expenses incurred after your last day but before the plan year ends depends on your specific plan document, so check the Summary Plan Description. For 2026, the maximum dependent care FSA contribution is $7,500 per household, or $3,750 if you are married and filing separately.⁸ COBRA generally does not apply to dependent care FSAs because they are not group health plans.

Starting a Health FSA at Your New Job

The annual contribution limit applies separately to each employer. For 2026, you can contribute up to $3,400 to a health FSA.² If you contributed $1,500 at your old job, you can still elect up to $3,400 at the new one. The IRS does not combine the two.

Your new account starts fresh. Nothing transfers from your prior employer’s plan, and no unused funds carry over to a different employer’s FSA.

Steps to Take Before Your Last Day

Check your balance. Log into your FSA administrator’s portal and compare your remaining balance against what you have contributed so far. If you have spent more than you contributed, the shortfall stays with the employer.
Schedule planned medical care. Eye exams, dental cleanings, physical therapy, prescription refills — use the balance for anything you know is coming.
Stock up on eligible items. Over-the-counter medications, first-aid supplies, and sunscreen can help you spend a balance down quickly.
Gather documentation. Each receipt should show the patient’s name, the provider’s name and address, the date of service, a description of the service, and the amount charged. Credit card receipts and canceled checks typically do not qualify.
Find your run-out deadline. Pull it from your Summary Plan Description, mark it on your calendar, and submit remaining claims well before it passes.
Run the COBRA math. If your former employer has 20 or more employees and your account is underspent, weigh the remaining balance against premiums through year-end. You have 60 days from when coverage ends to elect.⁷

For dependent care accounts, check whether your plan permits claims for expenses incurred after termination. If it does, keep submitting daycare or camp receipts through the end of the plan year to recover the funds already withheld from your paychecks.

1
Internal Revenue Service. IRS: Eligible Employees Can Use Tax-Free Dollars for Medical Expenses
2
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
3
Internal Revenue Service. Modification of Use-or-Lose Rule for Health Flexible Spending Arrangements
4
U.S. Department of the Treasury. Section 125 Proposed Treasury Regulations – Section 1.125-5
5
Office of the Law Revision Counsel. 26 USC 4980B – Failure to Satisfy Continuation Coverage Requirements of Group Health Plans
6
U.S. Department of Labor. Continuation of Health Coverage (COBRA)
7
U.S. Department of Labor. COBRA Continuation Coverage
8
FSAFEDS. New 2026 Maximum Limit Updates