It’s almost the end of the year, and for many, that means health flexible spending account (FSA) funds are set to expire. FSAs allow employees to set aside pretax money to pay for healthcare expenses such as copays, some medications, and deductibles. But many people aren’t aware that the funds don’t always roll over into the next calendar year after December 31.
Sometimes, employers will provide grace periods of up to two and a half months past the end of the year to allow for extra time to use your FSA funds. Others may allow you to carry over up to $660 per year. But 33% of employers have a hard deadline, so if you don’t use your funds by the end of the year, they’re gone. In 2023, around half of all FSA account holders forfeited some funds back to their employers, with the average amount left in accounts being $436.
In general, experts say this is because many Americans don’t know of the deadline. “People tell us one of the main reasons they forfeit FSA funds is because they aren’t aware that they have a deadline in the first place, or they don’t know how much they have left in their account,” says Rachel Rouleau, chief compliance officer for Health-E Commerce, the parent company of the FSA Store, per CNBC.
Still, even if employers don’t roll over funds or offer grace periods, there are some ways to make the most of your funds before the year is out—even if you don’t have healthcare expenses left to cover. According to Joseph Giordano, compliance manager for Health-E Commerce, there are tons of everyday products that you’d likely be buying anyway that can be covered by FSAs. “We estimate that the average American household spends $1,600 a year on healthcare purchases that are FSA eligible,” Giordano told Yahoo Finance.
The list of items that can be paid for with FSA funds is extensive. It includes baby care items, skincare products (like face masks), high-tech health devices (like foot massagers), telehealth services, acne medication, cold and flu medicines, and more. Find the full list of eligible products on the FSA Store website.