How to Use Up Your FSA Before It Resets, and Plan Smarter for Next Year

October is a good time to check your Flexible Spending Account balance. The plan year is closing in on its deadline for most people, and open enrollment for next year’s benefits is starting at many employers in the next few weeks.

The Use-It-or-Lose-It Rule

Healthcare FSA funds that go unused by the end of the plan year are forfeited by default. That’s the rule the account runs on unless your employer has built in one of two specific exceptions, a grace period of up to an extra two and a half months to spend what’s left, or a limited carryover amount that rolls into the next plan year. An employer can offer one of these two options, not both, and some plans offer neither, which means a hard deadline with no extra room.

This is exactly why checking now matters. If your plan has no grace period and no carryover, whatever’s sitting in the account at year end is simply gone. Pull up your balance and your plan’s specific rules before assuming either exception applies to you.

Ways to Spend Down What’s Left

If it looks like you’ll have money left over, there are several broadly eligible ways to use it before it’s lost. Stock up on eligible over-the-counter medications and supplies. Schedule a dental cleaning, an eye exam, or order new glasses or contacts. Get prescriptions refilled while they’re still eligible. Look into elective procedures, physical therapy, or FSA-eligible medical equipment you’ve been putting off. Don't simply guess at coverage though. Most plan administrators publish a list of eligible expenses, and that list is the place to check before buying anything you’re hoping will qualify.

Check With Your Plan Administrator First

Every point above is a general rule, and FSA plans vary by employer. Whether you have a grace period or a carryover, what the carryover cap is, and which specific expenses qualify can all differ from one plan to the next. Before spending or assuming a deadline, confirm the details with your plan administrator or your plan documents directly.

Planning for Next Year

Since many employers are opening enrollment for next year’s benefits right now or in the coming weeks, this is also the moment to decide how much to contribute going forward. For 2026, the maximum employee contribution to a healthcare FSA is $3,400. The 2027 limit hasn’t been officially released by the IRS yet, so if you’re enrolling for next year, use the current $3,400 figure as your reference point until the updated number is announced.

The tax benefit works in a simple, direct way. FSA contributions come out of your paycheck before taxes, which lowers your taxable income and avoids both federal income tax and payroll tax (Social Security and Medicare) on that portion of your pay. That’s a real, guaranteed savings on money you were going to spend on medical costs anyway, which is different from an investment return and doesn’t depend on the market doing anything.

The tradeoff is the same use-it-or-lose-it risk on the other end, so the right contribution amount is one based on a realistic estimate of next year’s medical expenses, not the maximum just because it’s available.

If you want help thinking through the right contribution number for your own situation, reach out and we’ll work through it together.

Jay Sexton is a finance instructor, doctoral candidate in Personal Financial Planning, and owner of Sexton Finance. He writes about financial identity, as well as the practical, behavioral, and emotional dimensions of financial decision-making at sextonfinance.com.