About half of all Flexible Spending Account holders forfeit money to their employer every year. The average lost amount is $441. Not because they couldn't use it — because they simply forgot to check the deadline. Here's how to make sure that doesn't happen to you.
50%
Of FSA holders forfeit funds every year — the average forfeiture is $441
$3,400
2026 FSA contribution limit — up $100 from 2025's $3,300 limit
$680
Maximum rollover allowed into the 2027 plan year (up from $660)
30% The savings potential when using pre-tax FSA dollars vs. after-tax spending
If you have a Flexible Spending Account through your employer or a spouse's employer, there's a quiet deadline approaching that most people don't think about until it's too late. The money you set aside from your paycheck — pre-tax dollars earmarked specifically for healthcare — doesn't automatically protect itself. Under IRS rules, if you don't use it before your plan year ends, it's gone. Not deferred, not returned. Gone to your employer.
The Employee Benefit Research Institute tracked this across millions of accounts and found that roughly half of all FSA holders forfeit money every single year. The average amount lost per account: $441. That isn't loose change. That's a prescription, a dental cleaning, a pair of reading glasses, or a hearing aid battery replacement — money that was already yours, already set aside, already earmarked. It just never got claimed.
"Your FSA is one of the few healthcare tools that saves you money twice — once on taxes, once on the bill. But only if you actually use it."
What a Flexible Spending Account Actually Is
An FSA is a benefit offered through employers — it's not available to self-employed individuals or through marketplace health plans — that lets you set aside a portion of your paycheck before federal income taxes are taken out, earmarked for qualified healthcare expenses. Because the money goes in pre-tax, it reduces your taxable income for the year. The practical effect: every dollar you put into an FSA is worth more than a dollar of after-tax spending on the same expense.
What Pre-Tax FSA Dollars Actually Mean for Your Healthcare Bills
~30% Potential savings on every eligible healthcare dollar when paid with pre-tax FSA funds vs. out-of-pocket after-tax spending, depending on your federal tax bracket. On a $1,000 dental procedure, that's a difference of roughly $200–$350 in real money.
$3,400 The 2026 annual contribution limit for a health FSA — up from $3,300 in 2025. If your employer offers an FSA, you elect your contribution during open enrollment. The full annual amount is available on day one of your plan year, even if you haven't yet contributed that much through payroll.
$680 The maximum carryover amount into the 2027 plan year — but only if your employer's plan allows carryovers. Many don't. Your plan may offer a grace period instead (up to 2.5 months extra). It cannot offer both. Knowing which one your plan uses is the single most important thing you can determine today.
The Use-It-or-Lose-It Clock — How It Actually Works
Most FSA plans run on a calendar year ending December 31. After that date — or after any applicable grace period — any remaining balance is forfeited to the employer. This is not an edge case or a technicality. It happens to roughly half of all account holders every year, representing hundreds of millions of dollars in collectively lost healthcare spending power across the country.
EBRI analysis of 3.2+ million FSA accounts (published May 2024); Empower FSA guidance, 2026; BLS National Compensation Survey 2025 for access percentages. The $441 average forfeiture figure has been consistent for several consecutive years, suggesting this is a structural behavior pattern, not a one-off anomaly.
Your First Move: Know Exactly What Your Plan Allows
Not all FSAs work the same way. Before doing anything else, find out which of these three structures your employer's plan uses — this determines your actual deadline and your real options.
Plan Structure | How It Works | Your Deadline |
|---|---|---|
Standard use-it-or-lose-it | All funds must be spent by the plan year end | Dec. 31 for most plans |
Grace period option | Up to 2.5 extra months after year-end to spend remaining funds on new eligible expenses | March 15, 2027 for most plans |
Carryover option | Up to $680 of unused funds may carry into the next plan year (employer must opt in) | Rolls over automatically |
One Critical Detail
Your employer can offer a grace period or a carryover — but not both. If you're unsure which your plan uses, check your benefits summary, FSA online portal, or call your HR department this week. Most FSA administrators also print the deadline on the back of your FSA debit card or in the online account summary.
What You Can Spend It On — A List Most People Don't Know Is This Long
Many FSA holders think of the account as covering doctor copays and prescriptions. The eligible expense list is significantly broader than that — and some categories are easy to overlook, especially for adults over 55 who may have a wider range of health-related needs.
Dental Exams and cleanings · Fillings and crowns · Orthodontia (some plans) · X-rays · Dental implants
Vision Eye exams · Prescription glasses · Reading glasses · Contact lenses and solution · LASIK (if prescribed)
Hearing Hearing exams · Hearing aid batteries · Hearing aids · Cochlear implant maintenance
Over-the-Counter Allergy and cold medications · Pain relievers · Blood pressure monitors · Glucose test kits · First aid supplies
Medical Equipment Crutches and canes · Bandages and wound care · Blood pressure cuffs · CPAP supplies · Compression stockings
Mental Health & Specialty Therapy and counseling · Acupuncture · Addiction treatment · Chiropractic care · Physical therapy
The "Forgotten Receipts" Check
Before you buy anything new, check whether you have receipts for qualified expenses from earlier in the plan year that you haven't submitted for reimbursement yet. Many FSA accounts allow reimbursement submissions for expenses incurred during the plan year right up to your plan's submission deadline — which is often several months after the year ends. This is found money that requires no new spending at all.
Your FSA Action Plan — What to Do Before Your Deadline
1 Log in and check your balance today
Most FSA accounts have an online portal or mobile app. Your current balance and your plan year deadline are both usually visible on the account home screen. If you don't have login credentials, the number on the back of your FSA debit card connects you directly to your plan administrator.
2 Check for unsubmitted receipts from earlier this year
Go through your records — email receipts, paper receipts, explanation of benefits statements — for any healthcare, dental, or vision expense you paid out of pocket this plan year and haven't yet submitted to your FSA for reimbursement. Submit those first before spending anything new.
3 Schedule any care you've been postponing
Dental cleaning overdue? Eye exam a few years out of date? Hearing checked recently? Prescription glasses due for an update? These are common deferrals among adults 55 and older — and they're all FSA-eligible. Scheduling now gets you the care and uses the funds before the deadline.
4 Stock up on eligible over-the-counter items you'll use anyway
If you have a remaining balance after steps 2 and 3, review the eligible over-the-counter list. Items like allergy medications, pain relievers, blood pressure monitors, first aid supplies, and similar products that you use regularly all qualify and can be purchased now with remaining FSA funds — items you would have bought anyway, just using pre-tax dollars.
Cost estimates are illustrative ranges based on typical retail pricing for FSA-eligible items as of mid-2026. Actual costs vary by provider, location, and plan. The purpose is to make the $441 average forfeiture concrete rather than abstract — it represents real, needed healthcare spending that simply never got claimed.
The HSA vs. FSA Distinction Worth Knowing
One of the most common points of confusion for adults over 55 is the difference between an FSA and a Health Savings Account (HSA). They share some surface similarities but work very differently in one important way: an HSA has no use-it-or-lose-it rule. Funds roll over year to year indefinitely and can be invested for long-term growth. FSAs do not work this way. If you have an HSA, you're not under a year-end deadline. If you have an FSA, you are.
Quick Comparison
FSA: Employer benefit · No rollover by default · Use-it-or-lose-it · 2026 limit $3,400 · Available with most health plans
HSA: Paired with a High Deductible Health Plan · Rolls over indefinitely · Can be invested · 2026 limit $4,300 (individual) · Owned by you, not your employer
If you have both: A limited-purpose FSA can work alongside an HSA, covering dental and vision expenses specifically — ask your plan administrator
The O55 Action Step — Three Things to Do This Week
Log in to your FSA account and find two things: your current balance and your plan's specific year-end deadline. Write both down.
Search your email or paper records for any qualifying healthcare expense from earlier this year that you paid out of pocket and haven't yet submitted. Submit those receipts this week.
Call and schedule any overdue dental cleaning, eye exam, or other routine appointment that qualifies — you're getting the care either way, and using pre-tax dollars to pay for it is better than losing the funds.
The O55 Takeaway
An FSA is one of the few tools in the U.S. tax code that directly reduces the cost of healthcare for working adults. The only thing that makes it not work is forgetting to use it before the deadline. A 15-minute check today — balance, deadline, unsubmitted receipts — can recover $200, $300, or the full $441 average before your employer's plan year quietly closes.
Educational Disclaimer: The content in this article is provided for general informational and educational purposes only. It does not constitute financial, legal, tax, or professional advice. Savings figures cited are general estimates based on publicly available 2025–2026 industry research and may not reflect your individual results. Program terms, discount availability, and savings amounts are subject to change by each retailer without notice. Always verify current program terms directly with the store or service provider before making purchasing decisions. The O55 Report does not receive compensation from any retailer or loyalty program mentioned in this article. Content is attributed to Mike Bridges, The O55 Report. © 2026 The O55 Report. All rights reserved. Visit www.theo55report.com for more free guides.
With care,
Mike Bridges
Founder, The O55 Report