f you have an employer-sponsored Flexible Spending Account (FSA), now is a good time to check your balance. FSAs allow you to pay eligible health care expenses with pretax dollars, but they're generally subject to a ''use-it-or-lose-it'' rule. Here's what you need to know.
Avoid forfeiting unused funds
Before rushing to spend your balance, review your employer's plan. For plan years beginning in 2026, the plan may allow you to carry over up to $680 of unused funds to the 2027 plan year.
Alternatively, it may provide a grace period of up to 2½ months after the plan year ends to incur eligible expenses. For a 2026 calendar-year plan that has a grace period, that period ends March 15, 2027. A plan can't offer both a carryover and a grace period - only one or neither.
If you have a calendar-year plan and expect to forfeit funds, consider using the funds for eligible expenses before December 31, 2026. These may include deductibles and co-payments, dental and vision care, medications, and certain medical supplies. Consult your plan for eligible expenses and reimbursement requirements.
Prepare for 2027
Year end is also a good time to review your FSA election. Compare how much you contributed for 2026 with what you spent on eligible expenses. Then consider your anticipated health care needs for 2027. Using your spending as a guide can help you maximize the FSA's pretax benefits while reducing the risk of setting aside more than you can use.