The end of the calendar year often brings a familiar challenge: unused Flexible Spending Account funds that vanish at midnight on December 31. With an average employee leaving hundreds of dollars unspent, avoid forfeiting your unused FSA funds by acting now. This guide will help you navigate deadlines, contribution limits, and best practices to maximize your pre-tax spending power before it’s too late.

FSAs are powerful tools offered by many employers. By contributing via payroll deduction, you secure substantial tax savings on everyday expenses while preparing for health and dependent care needs. But without proper planning, those hard-earned dollars disappear.

Understanding Flexible Spending Accounts

Flexible Spending Accounts are employer-sponsored benefit programs funded with pre-tax dollars. Contributions are deducted from your paycheck before taxes, reducing your overall taxable income. Funds in a Health Care FSA can cover eligible medical expenses such as copays, prescriptions, and certain over-the-counter items. A Dependent Care FSA helps offset costs for daycare, after-school programs, and elder care.

While FSAs deliver outstanding value, they vary by employer. Some plans follow the calendar year, ending on December 31, while others align with different cycles. Always verify your plan’s specific rules to make the most of every dollar.

Key Deadlines and 2025 Contribution Limits

Understanding deadlines is vital. For calendar-year FSAs, the last day to incur expenses is December 31, 2025. Claims submission deadlines can extend into the following spring or summer—commonly until March 31 or April 30, 2026. If your employer offers a grace period, you may have until March 15, 2026 to use remaining funds. Alternatively, some plans allow you to carry over up to $660 into 2026, up from $640 in 2024.

The 2025 contribution limits are also noteworthy. The Health Care FSA limit increased to $3,300 — up from $3,050 — while the Dependent Care FSA limit remains at $5,000 per household (or $2,500 if married filing separately). The minimum annual election stands at $100. These adjustments underscore the importance of planning and adjusting your contributions during open enrollment.

Grace Periods vs. Carryovers

Employers may choose to offer a grace period, a carryover, or neither. A grace period provides an extra 2.5 months after the plan year ends to incur eligible expenses. Carryovers allow you to roll over a set amount—up to $660 for 2025—into the next plan year.

Neither option is universal. Without a grace period or carryover, any unspent FSA funds are forfeited at year’s end. Always check your plan documentation or consult HR to confirm which provisions apply to you. confirm your plan’s specific features to steer clear of unexpected losses.

Eligible Expenses and Spending Tools

FSA funds can be used for a broad range of qualified expenses. Check your plan administrator’s list, and remember that some over-the-counter items now qualify with a prescription. Common eligible expenses include:

• Medical copays, deductibles, and co-insurance
• Prescription drugs and insulin
• Dental care, such as cleanings and orthodontia
• Vision care, including glasses and contact lenses
• Dependent care services for children or elders

Many FSAs offer debit cards that work at eligible merchants. When using your FSA card, keep receipts or documentation on file—some claims may require proof of purchase. use your FSA debit card confidently to streamline transactions and reduce out-of-pocket costs.

Maximizing Your FSA Funds: Action Steps

As the deadline approaches, take concrete steps to maximize your account:

• Review your FSA balance and recent transactions.
• Schedule medical appointments, dental cleanings, or vision exams.
• Create a list of eligible over-the-counter items to purchase.
• Submit all outstanding claims before the submission deadline.
• Adjust your 2026 election based on anticipated needs.

By following these steps, you ensure that every dollar allocated to your FSA is put to work. plan your expenses strategically to close out the year with a zero balance and avoid forfeiture.

Final Checklist and Next Steps

Ensure you leave no FSA dollar unused by completing this final checklist:

• Verify your plan’s year-end and claims deadlines.
• Confirm whether you have a grace period or carryover.
• Review your remaining balance and pending claims.
• Purchase eligible items or schedule services.
• File all claims and documentation before deadlines.

With these actions, you’ll secure your pre-tax savings benefits and head into the new year with confidence. Remember, FSA rules differ across employers, so always consult your plan administrator or HR representative for the most accurate information. By staying informed and proactive, you can transform unused funds into tangible health and wellness benefits—no dollars left behind.