The short version
Three rules beat the forfeit. Rule one: find out which deadline you actually have. Some plans let unused money carry into the new year, some add a grace period, and some let everything expire on December 31 — confirm with your plan administrator first. Rule two: spend it on care you'd buy anyway. Prescriptions, dental visits, glasses, sunscreen, first-aid supplies — the boring stuff that quietly drains the balance. Rule three: don't leave appointments for December. Dentists and eye doctors book out weeks ahead, so call now, not on New Year's Eve. Not sure what's at stake? Run your numbers in the FSA spend-down calculator.
The three deadline types — and the run-out trap
Every health FSA uses the use-it-or-lose-it rule, but employers choose how strict it is. A hard deadline is the simplest: whatever is left on December 31 is gone.
A grace period gives you up to two and a half extra months — usually through mid-March — to spend leftover funds. That's extra time to receive care and pay for it, not to file paperwork.
A limited carryover lets up to $680 roll into the next plan year automatically, with no need to spend it first. Your employer can offer a grace period or a carryover — never both — and some plans offer neither, which means the hard deadline.
Then there's the trap: the run-out period. Many plans give you a few extra weeks or months to file claims — but the expenses must have been incurred before the plan year ended. A run-out period is filing time, not shopping time. Keep two dates on your calendar: the spend date (last day the care can happen) and the claim date (last day to submit the receipt) — confuse the two and January buys won't count.
Your spend-down playbook
Appointments first. Copays for appointments already on the books are the easiest legitimate spend. Call your dentist for a cleaning, your eye doctor for an exam, and schedule anything you've been putting off — physiotherapy, chiropractic care, acupuncture. December slots fill fast, so book this week.
Vision. A new pair of glasses, prescription sunglasses, or a year of contact lenses can wipe out several hundred dollars in one receipt. Contact lens solution counts too. Your FSA covers tax dependents through age 26 — a teen's new frames are fair game.
Pharmacy. Refill maintenance prescriptions for the full 90 days where allowed, and stock up on OTC basics: pain relievers, allergy pills, cold medicine, and menstrual care products. Broad-spectrum sunscreen rated SPF 15 or higher is eligible too.
Stock up on supplies. First-aid kits, bandages, thermometers, blood pressure monitors, and reading glasses are all eligible. A massage gun qualifies under many plans — check yours first. The one hard rule: buy things you'd actually use. Forfeiting $200 at a 22% marginal tax bracket costs you about $44 in real tax savings — so spending $200 on junk to "save" that $44 is a terrible trade.
Worked example: the $1,200 balance
Say you have $1,200 left in early December. If your plan allows the $680 carryover, only $520 is truly at risk — a pair of glasses, a dental cleaning, and a pharmacy stock-up handles it. But if your plan offers no carryover and no grace period, the full $1,200 evaporates on December 31. Same balance, completely different urgency — which is why finding your deadline type comes first.
Map the gap: balance minus expected December expenses minus carryover equals the amount that still needs a home. Plug your own numbers into the FSA spend-down calculator to see exactly how much is at risk and what to prioritize.
Plan next year's election better
Open enrollment is your chance to never have this problem again. Pull last year's actual health spending — prescriptions, dental, vision, therapy — and use the average as your starting point, then add a cushion for one planned procedure or new prescription. Skip the round-number guess ($2,000, $2,500) — the average-based method lands closer to your real spending.
If you consistently forfeit a few hundred, cut the election by that amount and put the difference in your paycheck instead — you'll save the same tax dollars with none of the stress. And if your employer offers a carryover, you can elect a little more boldly knowing $680 of it survives. The 2026 contribution limit is $3,400, so there's headroom if you were too cautious this year.
Frequently asked questions
What does "use it or lose it" actually mean?
Health FSA money comes out of your paycheck before taxes, and in exchange the IRS requires you to spend it during the plan year. Anything you don't spend — and can't carry over or use during a grace period — goes back to your employer.
What's the difference between a grace period and a carryover?
A grace period extends the spending window by up to 2.5 months after year-end, with no limit on the amount. A carryover moves up to $680 of unspent money into the next year automatically. An employer can offer one or the other — never both — and some plans offer neither.
What is the run-out period really for?
Filing claims only. It's extra time to submit receipts for care you already received during the plan year. Buying something new after December 31 and filing it during the run-out period doesn't count — the expense date is what matters.
Are over-the-counter medicines really eligible?
Yes. Since the CARES Act, most OTC drugs and medicines no longer require a prescription — pain relievers, allergy meds, cold remedies, menstrual care products, and SPF 15+ broad-spectrum sunscreen all qualify under standard IRS rules. Your plan's eligible-items list is the final word.
What if I just can't spend it all in time?
Prioritize big-ticket care first: glasses, dental work, therapy sessions. Then stock up on supplies you'll genuinely use. If you're still short, some plans accept a spouse's or dependent's eligible expenses. And accept the math: forfeiting $100 in the 22% bracket only cost you about $22 of tax benefit — don't spend $100 on junk to "save" $22.
Is a massage gun really eligible? What about other borderline items?
Many plans treat massage guns and other therapeutic devices as eligible, but not all — some require a letter of medical necessity from a doctor. The same goes for items like compression garments or special skin products. When in doubt, check your plan's eligible-items list or ask your administrator before you buy; IRS Publication 969 is the reference behind the rules.