Money in a health FSA expires at the end of your employer’s plan year, which for most plans is December 31. Two optional features can soften that deadline: a grace period of up to two months and 15 days to spend leftover funds, or a carryover that lets you roll up to $680 into the 2026 plan year. Anything left after those windows close is forfeited.
The Plan Year Deadline
Your FSA balance expires at midnight on the last day of your employer’s plan year. Many employers run benefits on a calendar year ending December 31, but federal law does not require that schedule. Some companies use a fiscal year that ends in June, September, or another month, so your deadline could fall on a completely different date. Check your plan documents or ask your benefits administrator if you are unsure.
An expense counts as “incurred” when you actually receive the care or buy the product, not when the bill arrives or you pay it. If your plan year ends December 31 and you schedule a procedure for January 2, that expense belongs to the new plan year and cannot be paid from the prior year’s funds.
Grace Period: Up to 2 Months and 15 Days
Some employers offer an optional grace period that gives you extra time to spend leftover funds after the plan year ends. Under IRS rules, the extension can last up to two months and 15 days beyond your plan year’s close. For a calendar-year plan, that pushes the spending deadline to March 15 of the following year.1Internal Revenue Service. Notice 2005-42
During the grace period, you can incur entirely new eligible expenses, such as dental visits, prescription eyeglasses, or over-the-counter medications, using money left from the prior plan year. Your plan draws from the prior year’s remaining balance first, then taps the new year’s funds. Anything still unspent when the grace period ends is forfeited.1Internal Revenue Service. Notice 2005-42
The grace period is not automatic. Your employer decides whether to include it, and a plan that offers a grace period cannot also offer the carryover described below.
Carryover: Up to $680 Rolls Into 2026
Instead of a grace period, your employer may allow you to roll a portion of your unused balance into the next plan year. For plan years beginning in 2026, the maximum carryover is $680. The maximum employee contribution for 2026 is $3,400.2Internal Revenue Service. Revenue Procedure 2025-32
Carried-over funds stay available for the entire new plan year, with no mid-year expiration. The carryover also does not reduce how much you can contribute through payroll deductions in the new year, so you could have up to $4,080 available in 2026 if you carry over the full $680 and elect the $3,400 maximum.3Internal Revenue Service. Modification of Use-or-Lose Rule For Health FSAs Notice 2013-71
Any unused balance above the $680 cap is forfeited. Like the grace period, the carryover is optional, and a plan that adopts it cannot also offer a grace period.3Internal Revenue Service. Modification of Use-or-Lose Rule For Health FSAs Notice 2013-71
Dependent Care FSAs Follow Different Rules
If you have a dependent care FSA for child care or elder care costs, the expiration rules are not the same. The IRS carryover provision does not apply to dependent care accounts, so unused funds cannot roll into the next year. Your employer’s plan may still offer the two-and-a-half-month grace period for dependent care FSAs, giving you until March 15 (for a calendar-year plan) to spend remaining funds on eligible care expenses.4U.S. Office of Personnel Management. What Is the IRS Rule on Carry Over
Because there is no carryover safety net, careful estimation matters even more for dependent care accounts. If your plan does not include a grace period, any leftover balance is forfeited the moment the plan year ends.
Run-Out Period: Time to File Claims, Not to Spend
The run-out period is easy to confuse with the grace period, but it does something different. A run-out period is a window after the plan year (or grace period) ends during which you can submit receipts and reimbursement requests for expenses you already incurred before the deadline. You cannot use this time to buy new items or schedule new appointments. It is purely an administrative window to get your paperwork in.
Run-out periods typically last 60 to 90 days, though the exact length is set by your employer’s plan document. Claim documentation generally needs to include the patient’s name, the provider’s name, the date of service, a description of the service or product, and the cost. For over-the-counter purchases, keep an itemized store receipt showing the product name, date, and price. Once the run-out period closes, any remaining balance you did not claim is permanently forfeited.
Leaving Your Job Ends FSA Access Early
Leaving your job, whether voluntarily or not, typically ends your FSA access on your last day of employment. You generally cannot continue spending after your termination date, and any remaining balance is forfeited. You do still get a run-out period to submit claims for expenses incurred before your last day.3Internal Revenue Service. Modification of Use-or-Lose Rule For Health FSAs Notice 2013-71
One exception is COBRA continuation coverage. If your health FSA has an “underspent” balance, meaning the amount remaining is worth more than the premiums you would pay for the rest of the year, the plan may be required to offer you the option to continue the FSA through the end of the plan year. Premiums equal your annual election divided by 12, plus a 2 percent administrative fee, and they are paid with after-tax dollars.5U.S. Department of Labor. COBRA Continuation Coverage
Spending Down Before the Clock Runs Out
If you are approaching the end of your plan year with money left in your health FSA, a wide range of eligible expenses can help you avoid forfeiture. Some of the most commonly overlooked items:
- Over-the-counter products such as allergy and sinus medicine, pain relievers, first-aid supplies, sunscreen, acne treatments, and sleep aids, all eligible without a prescription.
- Feminine hygiene products, including pads, tampons, and menstrual cups.
- Vision care: prescription eyeglasses, contact lenses, contact lens solution, and prescription sunglasses.
- Dental work, including cleanings, fillings, and orthodontic adjustments.
- Preventive care copays for annual physicals, flu shots, and recommended screenings.
The simplest long-term strategy is to estimate conservatively when you make your election during open enrollment. Review your spending from previous years before choosing a contribution amount, and remember that only your health FSA may offer a carryover cushion. Dependent care accounts do not.6HealthCare.gov. Using a Flexible Spending Account (FSA)