does flex spending account roll over

If you have a Flexible Spending Account (FSA), you know it’s a fantastic way to save money on healthcare costs using pre-tax dollars. But as the year winds down, a common question pops into many people’s minds. You might be wondering, does flex spending account roll over at the end of the plan year? The answer isn’t a simple yes or no, and knowing the rules can help you make the most of your benefits and avoid leaving money on the table.

So, Does Your Flex Spending Account Roll Over?

The rules for your FSA are set by your employer’s specific plan, but there are two main options you should know about. The first is a grace period. Some plans offer an extra two and a half months after the year ends to use your remaining funds. So, for a calendar-year plan, you’d have until March 15th to spend the money. The second option is a carryover. Many plans now allow you to carry over up to a certain amount—often around $610—into the next full plan year. It’s crucial to check with your HR department or benefits administrator to see which option, if any, your plan uses.

What Happens If You Don’t Use Your FSA Funds?

If your plan doesn’t have a grace period or a carryover provision, the traditional “use-it-or-lose-it” rule applies. This means any money left in your account at the end of the plan year is forfeited. This is why planning your FSA contributions carefully is so important. No one wants to see their hard-earned savings disappear.

Smart Tips for Managing Your FSA

To make your FSA work for you, start by estimating your upcoming medical expenses. Think about predictable costs like co-pays, prescription medications, and planned procedures. Don’t forget that FSAs cover a wide range of items you might already buy, such as bandages, sunscreen, reading glasses, and over-the-counter medicines with a doctor’s prescription. As the year ends, take stock of your balance. If you have funds to use, consider stocking up on eligible essentials or scheduling that annual eye exam to ensure your dollars are put to good use.

Understanding your FSA’s specific rollover rules is the key to maximizing this valuable benefit. By knowing whether you have a grace period, a carryover, or a use-it-or-lose-it deadline, you can plan your healthcare spending with confidence and make the most of your tax-free savings.