How to Use Up Your FSA Funds Before the Deadline

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows you to set aside pre-tax money for eligible healthcare expenses. This reduces your taxable income, offering a tax advantage. A core characteristic of an FSA is the “use it or lose it” rule: funds not spent by a deadline typically revert to your employer. Maximizing this benefit requires understanding how to utilize these funds before expiration.

Understanding Your FSA Account Details

The exact amount you have available and the deadlines for using your Flexible Spending Account funds are determined by your employer’s plan design. This information is typically accessible through your employer’s human resources department, a benefits portal, or your FSA administrator’s website or mobile application.

Your plan year end date is a primary deadline, but employers often offer options for additional flexibility. A common option is a grace period, which extends the time to incur eligible expenses for up to two and a half months after the plan year ends. For instance, if your plan year concludes on December 31st, a grace period could allow you to use funds until March 15th of the following year.

Alternatively, some plans offer a carryover option, allowing you to transfer a portion of unused funds into the next plan year. For plan years ending in 2025, the IRS permits a carryover of up to $660. Employers typically offer either a grace period or a carryover, but not both. Confirming which provision applies to your FSA is a necessary first step.

Identifying Eligible Health Care Expenses

Many healthcare products and services qualify for Flexible Spending Account reimbursement, covering common medical, dental, and vision needs. The IRS provides guidelines for what constitutes a qualified medical expense, including expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any body structure or function.

Common eligible expenses include doctor’s office visits, co-pays, deductibles, and hospital services. Prescription medications are eligible, as are dental treatments like cleanings, fillings, crowns, and orthodontia. Vision care also qualifies, covering eye exams, prescription eyeglasses, contact lenses, and contact lens solutions.

Beyond traditional categories, the CARES Act significantly expanded the list of eligible over-the-counter (OTC) items. Many OTC medicines and products no longer require a prescription for reimbursement. This includes:
Pain relievers (e.g., ibuprofen, acetaminophen)
Cold and flu medications
Allergy medicines
First-aid supplies like bandages and antibiotic creams

Menstrual care products, certain sunscreens, and acne treatments are also eligible without a prescription. While the IRS provides a comprehensive list, plan administrators may have more restrictive rules. Consult your specific plan documents or administrator’s list of eligible expenses to ensure purchases qualify for reimbursement.

Using Your FSA Funds and Submitting Claims

Many FSA plans provide a debit card for direct payment at the point of sale for eligible expenses. Using this card simplifies transactions, as funds are immediately drawn from your FSA.

Even when using an FSA debit card, retain itemized receipts for all purchases. The IRS requires all FSA transactions, including those made with a debit card, to be substantiated as eligible expenses. While some transactions may auto-substantiate at certain merchants, you may still be asked for documentation. An itemized receipt should clearly show the date of service or purchase, a description of the item or service, the dollar amount, and the provider or store name.

For out-of-pocket expenses, submit a claim for reimbursement. This typically involves logging into your FSA administrator’s online portal or completing a paper claim form. Attach supporting documentation, such as an itemized receipt or an Explanation of Benefits (EOB) from your health insurance provider. The EOB is useful for medical services as it details how much your insurance covered and the amount you owe, which is then eligible for FSA reimbursement. After submitting your claim and documentation, the administrator reviews it for compliance with IRS rules and your plan’s terms before processing your reimbursement, often issued via direct deposit or check.