What happens if you do not use all the funds in a Flexible Spending Account (FSA) within a year?

In the context of a Flexible Spending Account (FSA), if you do not use all the funds within the plan year, those unused funds are typically lost. This is because FSAs operate on a "use-it-or-lose-it" basis, which means that any contributions to the account must be spent on eligible expenses within the designated plan year.

While there are some options for limited carryover or extensions provided by certain employers, the default rule is that any remaining balance at the end of the year generally cannot be refunded to you or rolled over into other accounts like a Health Savings Account (HSA). Therefore, it is crucial for account holders to plan their medical expenses carefully to maximize their benefits from their FSA and ensure they utilize the funds effectively before they expire at the end of the year.