FSA deadline: use-it-or-lose-it, the grace period, carryover and the receipts to keep

A health FSA is use-it-or-lose-it: the IRS says money left at the end of the plan year can't generally be carried over. The exception is up to your employer. A plan may offer a grace period of up to 2½ months after the year ends, or let you carry over up to $680 of unused money from 2026, but never both. If your plan runs on the calendar year, the real deadline is December 31, 2026, or March 15, 2027 with a grace period.

It's October, so you have time. The first step is to find out which rule your plan has. Your benefits portal or plan summary says; if you can't find it, ask the plan administrator. HealthCare.gov puts it the same way: the employer can offer one of two options, not both.

• $3,400most you can contribute through salary reduction in 2026up $100 from 2025
• 2½ monthslongest grace period a plan may offerends March 15 for a calendar-year plan
• $680most a plan may let you carry over from 2026the plan can set a lower cap
• Not botha plan can offer a grace period or a carryoveryour employer picks one, or neither

Stand: October 2026 · Sources: IRS news release IR-2025-103; IRS Publication 969.

What the IRS rules say

IRS Publication 969 spells out the structure. With a grace period, any qualified medical expenses you incur in the extra window can be paid from the balance left at year end, and your employer isn't permitted to refund part of the balance to you. With a carryover, the plan may let you move unused amounts into the next plan year, may set a lower dollar cap, and forfeits whatever exceeds it.

A carryover doesn't change how much you're allowed to contribute for the new year. And a plan adopting a carryover isn't allowed to also provide a grace period for health FSAs.

The 2026 numbers

1. Now (October)Check your balance and your plan's grace-or-carryover rule
2. Dec. 31, 2026Plan year ends; spend or schedule care before this date
3. Jan. 1 – Mar. 15, 2027If your plan has the grace period: expenses incurred now can use last year's balance
4. Jan. 1, 2027If your plan has the carryover: up to $680 moves into the new year
5. Your plan's cutoffLast day to submit claims, set by your plan administrator

Stand: October 2026. Dates assume a calendar-year plan. The grace period is up to 2½ months after the plan year ends; the claims cutoff is set in your plan documents.

For tax years beginning in 2026 the IRS says the limit on voluntary salary reductions for health FSAs is $3,400, up $100 from the year before. For plans that permit carryover, the maximum carryover is $680, up $20.

The agency announced those figures on October 9, 2025; check IRS.gov for the 2027 figures before you set your 2027 election. One caution on sources: HealthCare.gov's glossary still shows an older carryover figure, so go by the IRS release.

What counts as spending it

Qualified medical expenses are things like copayments and deductibles, qualified prescriptions, insulin and medical devices, as HealthCare.gov lists them. Some things don't qualify: the IRS says you can't use an FSA for health insurance premiums, long-term care, or amounts covered under another health plan.

The expense must also be incurred during the coverage period. FSAFEDS, the federal employees' program, notes that it can't reimburse an expense until the service has actually happened, so paying early for next year's care doesn't work. It also covers over-the-counter medicines without a prescription since January 1, 2020, but not items used for general health or cosmetic purposes.

You also can't deduct an expense on Schedule A that the FSA already reimbursed.

Spend down without wasting money

• Name of the patientthe person who got the service; may be left off for retail purchases
• Provider or merchant name
• Date of service or purchasemust fall in the plan year (or grace period)
• What the service or item wasan itemized receipt or an insurer's Explanation of Benefits
• The amount you paidafter insurance

Example from FSAFEDS, the federal employees' FSA program. Your administrator's list may differ; credit card receipts alone don't meet it there.

Look at your balance now, then at what you actually need: glasses or contacts, dental work that insurance only partly covers, prescriptions you can refill early, a pending specialist visit. Appointments need to be completed by the deadline for the expense to be incurred, so schedule them in November rather than the last week of December.

Avoid buying things you don't need to burn the balance. A leftover few dollars is usually less bad than a drawer of unneeded purchases, and a plan with a carryover may protect part of it.

Receipts: what to save

Plans ask for proof. FSAFEDS, which is a government-run example, says to save receipts and that the IRS may request itemized receipts. For a claim it wants an Explanation of Benefits, itemized receipt or similar document showing the patient (not needed for retail purchases), the provider or merchant, the date, what the service or item was, and the cost. Credit card receipts, canceled checks and balance-forward statements don't qualify there. Your plan may differ, so check its list.

If a claim is rejected, the usual reason is a receipt missing one of those fields. The medical bills and EOB scenario shows how to read the paperwork that comes with a visit, and the medical records guide covers the longer-term folder.

Keeping the receipts findable

The manual way: photograph each receipt when you get it, save it into a folder named for the plan year, and put a calendar reminder for early November. The retention guide says how long medical paperwork generally stays useful.

Paperlock reads the provider, date and amount from a photo of a receipt or EOB and files it, so "what FSA-eligible receipts do I have from this year?" becomes a question rather than a search. Your plan administrator has the final say on deadlines and eligible expenses.