How to Spend Your Extra FSA Money Before It’s Gone for Good

Lacie Glover
By Lacie Glover 
Edited by Rick VanderKnyff

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.


Flexible spending arrangements (FSAs) can help you spend less on health care, but only if you use yours correctly — by spending all the money in it before a year-end deadline.

FSAs are tax-advantaged accounts that can be used for medical expenses only; they're sometimes also called flexible spending accounts. They’re different from health savings accounts, or HSAs, in that the money can be spent only in the calendar year it’s contributed.

In other words, FSA funds are use it or lose it, and any unused money left over at the end of the year is no longer yours. Unused funds go to your employer, who can split it among employees in the FSA plan or use it to offset the costs of administering benefits.

Under no circumstances can your boss give the money back to you directly, according to IRS rules. Once the plan year is over, that money is gone. So if you have any left toward the end of the year, you’ll need to figure out when and how to spend it. You have more options than you might expect.

Two options for that extra cash

You can contribute up to $2,550 to your FSA this year, so you could have a lot of unused money to spend. While you can’t have any back, there are two cases where you may get a little extra time to spend your FSA cash:

  • A rollover option, where you can move up to $500 to next year’s balance.

  • A grace period, when you can keep spending FSA money up to 2½ months past the end of the plan year. Because most plan years are calendar years, this option usually allows you to use the money from Jan. 1 to March 15 the next year.

Your FSA likely has one of these options for excess money in the account, but it cannot have both under IRS rules. Before you try to spend the leftover cash, you should know whether either option applies to your FSA so you know how much you really need to use now.

If you have the rollover option, you’ll have all of next year to spend that money, on top of any money you plan to contribute next year. If that’s the case, you’ll only have to worry right now about the money in excess of your rollover limit.

If your plan has a grace period, you’ll have a little extra time to spend that money, but you’ll have to spend it all or forfeit some. Most FSA plans come with a debit card you can use for qualified expenses, but if yours doesn’t, pay close attention to your claims window. In many FSAs with an extension option, the deadline to use the money is the same as the deadline to submit claims to the FSA broker for the year.

How to spend it

“What most people don’t understand is that the list of eligible expenses is pretty robust,” says Steve Auerbach, CEO at Alegeus, a benefits management company. “What most people view as routine expenses can actually be FSA-applicable.”

To learn what's allowed, visit an online FSA store that sells only FSA-eligible items, like FSAstore. Your plan administrator may have coupon codes or special deals so you can get more for your tax-free dollar, so head to your online FSA portal to find out first.

Medical spending includes expenses for hearing, vision and dental health, even if you don’t have insurance for those. So if you’re nearly due for a teeth cleaning or eye exam, make an appointment and you can use your FSA to pay for those visits, including copays and coinsurance.

You can also submit an FSA claim for:

  • Any travel for medical care you did this year.

  • Acupuncture treatments.

  • Chiropractor visits.

  • Mental health and drug abuse counseling.

  • Birth control or abortions.

  • Artificial teeth or limbs.

  • Qualified service animals, such as a guide dog, including food and grooming costs.

You can spend your FSA money on medical expenses for your spouse, children or any other qualifying dependent you claim on your taxes. If you have grown children on your health insurance plan but don’t claim them as dependents, you can still spend FSA money on their medical expenses if they will be 26 at the end of the current plan year, usually Dec. 31.

The IRS has a list of approved medical expenses you can check out for more details. It includes most expenses related to medical care, with the notable exceptions of health insurance premiums and over-the-counter medication.

Avoid this situation next year

While FSAs can save a lot of tax money, those savings aren’t as clear when you have to hurry at the end of the year to spend more money to get the benefit. Still, the issue isn’t uncommon, according to Auerbach, who says his firm sees a lot of FSA activity at the end of each year.

If this is your second or third time having to scramble to spend all of your FSA money, why not aim to contribute the perfect amount to your FSA in the first place?

A good starting point is determining how much of your FSA funds you spent effortlessly this year. When it’s time to decide how much goes into the next one, you can select that amount. The exception is if you have any large expected medical costs, such as a planned surgery or new baby, coming in the next year. In those cases, you might want to add more.

If your FSA plan has the rollover option and you plan on leaving some in for next year, you can contribute even less. Though the rollover option will likely be available next year, you’ll have to spend this year’s funds before you dip into next year’s.

Despite the hassle of having to spend this extra money, FSAs are generally a good way to avoid paying taxes on medical costs. Even using the money on things you wouldn’t have thought of is better than losing it, so pat yourself on the back for being a savvy consumer.