More than $1 billion could be forfeited in health-care flexible spending accounts this year

More than  billion could be forfeited in health-care flexible spending accounts this year

Jose Luis Pelaez Inc | DigitalVision | Getty Images

If you have a flexible savings account for health-care expenses, it’s probably worth checking whether any of that money is on the verge of disappearing.

An estimated $1 billion in those accounts could be forfeited in 2022, according to an estimate from Some forfeitures could happen soon, due to a March 15 deadline at companies that have a 2.5-month grace period for spending the previous year’s unused FSA funds.

“We’re concerned that if workers don’t understand their deadlines … they’re going to forfeit money,” said Rachel Rouleau, vice president of compliance for Health-E Commerce, parent company of

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FSAs let workers stash away pretax money for qualifying medical expenses or, separately, dependent-care expenses. The limit for 2022 contributions to health-care FSAs is $2,850, up from $2,750 last year. 

The standard deadline to use your health-care FSA money is Dec. 31 of the year in which you make the contributions. However, 36% of employers allow a 2.5-month grace period to spend the money, according to recent research from the Employee Benefit Research Institute. 

Some employers also may have adopted a temporary federal rule allowing the grace period to last a full year — or up to Dec. 31, 2022. However, it’s estimated that fewer than 50% of companies adopted the change.

It’s also possible that your company allows rollovers (up to $550 for 2021 dollars) and, maybe, adopted the temporary rule allowing no cap on the amount rolled into 2022 that can be used at any time in the year.

More than a third of workers (37%) with a grace period end up forfeiting part or all of their contributions, according to EBRI. However, that’s below the 48% with a traditional Dec. 31 deadline who forfeit money, and 49% of those who are allowed to roll over money.

If you’re uncertain what the rules are for your FSA, reach out to your company’s human resources department, Rouleau said. Alternatively, you can check your online FSA portal (if your company has one) for information. There also should be a phone number on the back of your FSA debit card that you can call.

There are literally thousands of ways to spend down funds on things they need before it’s too late.

Rachel Rouleau

vice president of compliance for Health-E Commerce

Meanwhile, Congress has expanded what qualifies as eligible medical expenses, and that applies to you no matter what company you work for. So you may be able to find eligible products you commonly use as a way to avoid losing funds. (This does not apply to limited-purpose FSAs, which generally cover just dental and vision expenses.)

“There are literally thousands of ways to spend down funds on things they need before it’s too late,” Rouleau said.

For starters, over-the-counter drugs no longer need a prescription to qualify. This includes things such as cold medicines, anti-inflammatories and allergy medicine. Additionally, menstrual care products are now eligible, as are items that have become pertinent during the pandemic: at-home Covid tests, masks, hand sanitizer and other personal protection equipment used to combat the virus.

Be aware, however, that the IRS does not allow stockpiling, which generally means you can’t buy more of a product at one time than you can use in that tax year. The specifics, though, are determined by FSA administrators.

And, of course, you can use your FSA funds for expenses such as doctor and dentist appointments, prescription drugs and other health-care services such as acupuncture and addiction treatment.

There also are items that you may not know qualify, such as sunscreen, thermometers, eyecare products, baby monitors and pregnancy tests. has a list of eligible items if you are uncertain whether something would qualify.

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