A Flexible Spending Account (FSA) lets you set aside pre-tax money for healthcare costs — but most FSAs come with a deadline. Use the money by the end of the plan year or you lose it. That “use-it-or-lose-it” rule catches many workers off guard, especially late in the year when deadlines are close.
Here’s how FSAs work, what qualifies as a valid expense, and how to make sure you don’t leave money behind.
Quick answer: what is an FSA?
An FSA (Flexible Spending Account) is a benefit offered by many employers that lets you contribute pre-tax dollars to pay for eligible medical, dental, and vision expenses. Because the money goes in before taxes are withheld, you effectively get a discount equal to your tax rate on every qualifying purchase.
The key limitation: most FSA money must be used within the plan year (or a short grace period). Unlike an HSA — which rolls over indefinitely — an FSA is either “use it or lose it” or has very limited rollover options.
FSA vs. HSA: the key difference
| FSA | HSA | |
|---|---|---|
| Who can have it | Employer-sponsored; most employees | Must have a high-deductible health plan (HDHP) |
| Rollover | Limited — use-it-or-lose-it or small rollover | Full rollover — never expires |
| Contribution limit (2025) | $3,300 (healthcare FSA) | $4,300 single / $8,550 family |
| Funds available upfront | Yes — full annual amount on day 1 | Only what you’ve contributed so far |
| Portability | Stays with employer — lost if you leave mid-year | Yours to keep regardless of job |
If you have both options available, an HSA is generally the stronger choice for long-term savings. But if you have an FSA through your employer, using it fully is essential — unused money disappears.
The use-it-or-lose-it rule
The IRS requires FSA funds to be used within the plan year. Employers may offer one of two relief options — but neither is required:
- Grace period: Up to 2.5 months after the plan year ends to spend remaining funds (common for calendar-year plans: use money until March 15)
- Rollover: Carry over up to $660 (2025 limit) of unused funds into the next plan year
Check your plan documents or ask HR which option your employer offers — or neither. If your employer offers nothing, the deadline is the last day of the plan year.
What you can spend FSA money on
Healthcare FSA funds cover a wide range of qualified medical expenses under IRS Publication 502:
Medical
- Doctor and specialist visits (co-pays and out-of-pocket costs)
- Prescription drugs
- Over-the-counter medications (no prescription needed since 2020 — Tylenol, cold medicine, etc.)
- Mental health therapy
- Chiropractic care
- Acupuncture (in some cases)
- Lab tests and X-rays
- Surgical procedures
- Hospital and urgent care co-pays
Dental
- Dental cleanings and X-rays
- Fillings, extractions, crowns
- Orthodontia (braces — usually eligible, sometimes on installment basis)
- Dentures
Vision
- Prescription eyeglasses and sunglasses
- Contact lenses and contact lens solution
- Eye exams
- Laser eye surgery (LASIK)
Other commonly covered items
- First aid supplies (bandages, thermometers)
- Blood pressure monitors and glucometers
- Menstrual care products (since 2020)
- Sunscreen (SPF 15+ that is broad-spectrum)
- Hearing aids and batteries
- Wheelchair, crutches, walker
- Insulin and diabetic supplies
- Fertility treatments (often covered)
- Smoking cessation programs and medications
What FSA money does not cover
- Cosmetic procedures (teeth whitening, plastic surgery, hair loss treatments unless medically necessary)
- Gym memberships or fitness equipment (unless prescribed for a specific condition)
- Health insurance premiums (a separate account — the Premium-Only Plan — handles those)
- Vitamins and supplements (unless prescribed for a diagnosed condition)
- Toiletries (toothpaste, shampoo, soap)
How to spend your FSA before the deadline
If you’re approaching your plan year deadline with money left over, here are legitimate ways to use it:
- Schedule overdue appointments. Dental cleanings, eye exams, physicals, or specialist visits you’ve been putting off.
- Stock up on OTC medications. Cold medicine, pain relievers, allergy medicine, antacids — all FSA-eligible since 2020.
- Order new glasses or contacts. If your prescription is current, order a backup pair or a year’s supply of contacts.
- Get that dental work done. Fillings, cleanings, or any work your dentist has recommended.
- Fill prescriptions. Refill maintenance prescriptions for the full supply.
- Buy eligible medical supplies. Thermometer, blood pressure cuff, first aid kit restocking.
FSA debit card vs. reimbursement
Most FSA administrators issue a debit card for direct purchases at pharmacies, medical offices, and qualifying retailers. Some purchases may require you to submit a receipt for verification. Keep all itemized receipts — if a charge is flagged as ineligible, you’ll need documentation or must repay the amount.
Some expenses — like paying a doctor who doesn’t accept FSA cards — require submitting a reimbursement claim through your FSA administrator’s portal. Most portals accept uploaded receipts.
What happens to FSA money when you leave a job
An FSA is tied to your employer. When you leave — voluntarily or not — your FSA typically closes as of your termination date (or the end of the month, depending on your plan). You can submit claims for eligible expenses incurred before that date, but you lose access to any remaining balance.
COBRA continuation coverage can sometimes extend FSA access, but it’s rarely worth the cost. The better strategy: use your FSA fully before leaving a job, especially if you know departure is coming.
Further Reading
- How to Read Your Employee Benefits Package
- What Is a 401(k) Match?
- Health Insurance Basics
- What Is a Deductible?
- HSAs and Taxes
- Jobs & Career
This article is for general educational purposes only and does not constitute legal, tax, or financial advice. Rules vary by state and employer. Consult a qualified professional for guidance specific to your situation.