Imagine setting aside $1,000 from your paychecks for health expenses, then handing part of it back to your employer because you forgot to spend it.
That is not a hypothetical. It happens to millions of people with Flexible Spending Accounts (FSAs) every year, and it usually happens in the last few weeks of December. If your plan runs on the calendar year, that deadline is roughly seven weeks away.
This guide covers how much money actually gets lost, why it happens, and the simple moves that keep your money yours.
How much FSA money is lost each year?
The most reliable data comes from the Employee Benefit Research Institute (EBRI), which studies a database of more than 3.3 million FSAs. For 2024, EBRI found:
| What EBRI found (2024 data) | Result |
|---|---|
| Share of FSA holders who forfeited money | About 4 in 10 (roughly 40%) |
| Average amount lost by those who forfeited | $404 (down from $436 in 2023) |
| Forfeiture rate when EBRI started its database in 2019 | About 44% |
| Account holders under 25 | 66% forfeited, average loss $406 |
| Account holders 65 and older | 36% forfeited, average loss $529 |
The trend is moving in the right direction, since the 2024 average was the lowest EBRI has recorded since it began tracking. But four in ten people is still a lot of people leaving money behind.
What does that add up to?
Here is our own back-of-the-envelope math. If 40% of account holders lose an average of $404, that works out to roughly $160 per account across everyone in the study. Across the 3.3 million accounts EBRI looked at, that is about half a billion dollars in a single year.
National totals are harder to pin down. Some analyses estimate forfeitures at several billion dollars a year, and others put the figure far lower, partly because no government agency tracks FSA forfeitures closely. The honest answer is that the exact national total is uncertain. What is clear is that the money lost per person is real.
Why people lose FSA money
The core reason is the “use it or lose it” rule. IRS guidance describes health FSAs as generally use-it-or-lose-it plans, and unused money at the end of the plan year can go back to your employer.
On top of that, a few things trip people up:
They guess their expenses too high. Many people choose a contribution during open enrollment months before they know how the year will go.
They forget the deadline. The plan year might end on December 31, or it might not. Plans differ, and your employer sets the rules.
They are not sure what counts. People assume only prescriptions and doctor visits qualify, and skip everyday items that are often eligible.
The 2026 rules that matter
| Rule | 2026 detail |
|---|---|
| Health FSA contribution limit | $3,400 per employee |
| FSA carryover (if your employer allows it) | Up to $680 can roll into the next plan year |
| Grace period (if your employer allows it) | Up to 2.5 months after the plan year ends |
| Grace period AND carryover | Employers can offer one or the other, not both. They can also offer neither. |
| Run-out period | A window to submit claims for expenses already incurred. It does not give you extra time to spend. |
How an HSA is different
A Health Savings Account (HSA) works very differently. HSA money belongs to you, it rolls over from year to year, and it does not disappear at year end. There is no use-it-or-lose-it deadline.
| FSA | HSA | |
|---|---|---|
| Unused money at year end | May be forfeited (unless carryover or grace period applies) | Rolls over, always yours |
| 2026 contribution limit | $3,400 | $4,400 self-only, $8,750 family, plus $1,000 if 55 or older |
| Who owns the account | Set up through your employer | You |
| Requirement | Offered through your employer | You need an HSA-eligible high-deductible health plan |
If you are choosing between the two, our HSA vs FSA guide goes deeper.
How to keep your FSA money
1. Find your balance and your deadline
Log in to your FSA portal or ask your benefits team two questions: how much is left, and what is the last day I can spend it?
2. Make a list of what you actually need
Think about the supplies you will use over the next year anyway. Blood pressure cuffs, thermometers, glucose test strips, first aid supplies and similar items are common FSA purchases. Buying what you will really use is better than spending for the sake of it.
Browse: HSA/FSA eligible products →
3. Order early
Do not wait for the last week of December. Shipping takes time and deadlines do not move. Ordering earlier also leaves room to fix a problem if something goes wrong.
4. Keep your receipts
Some plans require documentation for what you bought. Save order confirmations and receipts in one place.
5. Plan next year’s contribution smarter
Look at what you really spent this year. If you finished with money left over, consider lowering next year’s contribution, or choosing a plan with carryover if one is offered.
We accept HSA/FSA at checkout. Your plan administrator makes the final call on eligibility.
Sources
EBRI: About Four in 10 FSA Accountholders Forfeited Unused Funds to Employers
IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans
IRS Rev. Proc. 2025-19 (2026 HSA limits)
Mercer: 2026 health FSA and other benefit limits
This article is for general education only and is not tax, legal or financial advice. Plan rules vary by employer, so confirm the details with your plan administrator or a qualified professional.