The Use-It-or-Lose-It Rule
The plain answer
Section titled “The plain answer”The use-it-or-lose-it rule means you may forfeit health FSA money that remains after your plan’s spending and claim deadlines. A grace period or carryover may exist depending on the employer plan, but neither is automatic.
For 2026, a plan that offers a carryover may allow up to $680 to move into the next plan year.
How it actually works
Section titled “How it actually works”Your employer sets the plan year and the deadlines for incurring expenses and submitting claims. Some plans offer a grace period that gives you extra time to incur eligible expenses. Other plans offer a carryover that lets a limited amount remain available in the next plan year.
A health FSA generally cannot offer both a grace period and a carryover. A run-out period is different: it gives you more time to submit claims for expenses incurred before the spending deadline.
What this means for you
Section titled “What this means for you”Read your employer’s summary plan description before choosing your annual contribution. Confirm whether the plan has a carryover, a grace period, a run-out period, and any deadlines tied to each feature.
Track your balance during the year and keep receipts or other documentation. If money remains late in the plan year, review eligible expenses before buying anything.
Common mistakes
Section titled “Common mistakes”- Assuming every plan includes the maximum carryover
- Confusing a claim submission deadline with extra time to incur expenses
- Waiting until the final days of the plan year to check the balance
- Contributing based on an unusually expensive prior year
- Buying items without confirming that they are eligible
Related pages
Section titled “Related pages”Educational content, not personalized financial, tax, or legal advice. No affiliate relationships. Figures are for tax year 2026 and change annually.Read the full disclaimer.