Health FSA dollars are use-it-or-lose-it. For a plan year ending December 31, 2026, you must incur eligible expenses by December 31, or by March 15, 2027 on a grace-period plan, or carry over up to $680 into 2027 if your plan allows. The 2026 election limit is $3,400.
The deal behind a flexible spending account is unusually front-loaded. On January 1 you have the entire year's election available, even though you'll spend all year funding it through payroll deductions. You could quit in February after spending the full $3,400 and never complete the funding. The use-it-or-lose-it rule is the employer's side of that bet, and forfeitures are what keep the arrangement legal under cafeteria-plan rules.
The saving grace is that the IRS lets employers soften the cliff. A plan can add a grace period, a carryover, or run-out procedures. What it can't do is offer all of them at full strength, and grace period plus carryover are mutually exclusive, so your first job is finding out which version you're enrolled in.
| Plan type | Last day to spend | What survives |
|---|---|---|
| Strict (no provision) | Dec 31, 2026 | Nothing; balance forfeited |
| Grace period | Mar 15, 2027 | Whatever you spent by then; the rest forfeits |
| Carryover | Dec 31, 2026 | Up to $680 rolls into the 2027 plan year |
Grace period and carryover suit different people. If your spending is predictable, carryover is strictly better: nothing expires as long as you stay under the cap, and you can even lower next year's election knowing the carryover is coming. If your spending is lumpy, the 2.5-month grace window buys time for a dental appointment that slipped into January.
Then there's the run-out period, which everyone confuses with the grace period. Run-out, commonly 90 days past the deadline, is only for filing claims on expenses you already incurred. It's paperwork time, not shopping time. A plan can pair run-out with either of the other two provisions.
Walk a $712 balance through a calendar-year grace-period plan. From January 1, 2026 the money is spendable. On December 31, 2026 the plan year ends, but the grace period keeps the card alive. Through March 15, 2027, new eligible expenses still draw on the 2026 balance, and any claims from 2026 can be filed. On March 16, 2027, whatever remains of the $712 is gone.
The same balance on a carryover plan behaves differently: on January 1, 2027, $680 reappears in the account (the extra $32 is forfeited), available all year. And on a strict plan, the entire $712 evaporates at midnight on December 31. One balance, three fates, decided entirely by a checkbox your employer picked during plan design.
Enter your plan year end, balance, and plan option. Get the spend-by date, daily target, and forfeit risk in one pass.
FSA Deadline Calculator →December is when the scramble starts, and the playbook is bigger than people think. Since 2020, over-the-counter medications qualify without a prescription: pain relievers, allergy pills, antacids, cold medicine, all of it. Sunscreen at SPF 15+ broad-spectrum counts. So do first-aid kits, thermometers, blood pressure monitors, reading glasses, contact lens solution, and bandages by the case.
For bigger balances, book appointments rather than shop. Dental cleanings, night guards, fillings, and orthodontia down payments are all eligible, and December appointment slots vanish early. Vision is equally good: prescription glasses, prescription sunglasses, backup pairs, contacts, and exams. Mental health therapy copays and chiropractic visits count too. Someone with $712 on September 15 needs about $6.65 a day through year-end; a single glasses order plus a dental cleaning clears half of it in a week.
One caution: FSA-eligible store lists include items the IRS accepts but your receipt may not itemize clearly. Keep itemized receipts, not just card statements, in case the plan asks for substantiation during run-out.
Election strategy beats December heroics. Base your 2027 number on what you actually spent this year plus known planned costs (a planned procedure, new glasses, a kid's ortho consult), not on the maximum. If you have a carryover plan, remember the leftover $680 effectively pre-funds 2027 and subtract it from your election. And if your household has predictable prescription or therapy costs, those alone can justify a safe floor election.
Also know when not to use an FSA at all. If you're HSA-eligible through a high-deductible plan, a general-purpose FSA disqualifies your HSA contributions; a HSA contribution calculator shows what you'd give up (up to $8,750 of family contributions for 2026, triple-tax-advantaged). Limited-purpose FSAs exist for exactly this overlap, covering dental and vision while preserving HSA eligibility.
⚖️ Not tax or benefits advice. Rules summarized follow IRS cafeteria-plan guidance as published for 2026 plan years; individual plans can be stricter. Your summary plan description is the source of truth.
Only if your employer elected a carryover provision, and only up to $680 from a 2026 plan year (20% of the $3,400 election cap). Many plans use carryover instead of the grace period; the two can't coexist. If your plan has neither, unused dollars are forfeited at year-end.
For a calendar-year plan, you generally must incur eligible expenses by December 31, 2026. Grace-period plans get until March 15, 2027. Claims for expenses you already incurred can usually be filed for about 90 days after the deadline, but that run-out window doesn't allow new spending.
Plenty beyond prescriptions: OTC medications without a prescription since 2020, SPF 15+ sunscreen, prescription glasses and sunglasses, contact lenses and solution, first-aid kits, blood pressure monitors, thermometers, and dental or orthodontia payments. Big-ticket options include new glasses, a dental night guard, or an orthodontia down payment.
It's how the cafeteria-plan trade works: you got the entire election on day one, tax-free, and can quit before fully funding it. Forfeitures are the offset, and the IRS lets employers use them to offset plan costs or reduce future elections, though not to pocket them as profit.