More than $1 Billion Could Be Forfeited in Healthcare FSAs This Year

March 11, 2022

While flexible spending accounts (FSA) can be a great way to save for healthcare expenses, many savers could unexpectedly find their accounts empty.

More than $1 billion in FSAs may be forfeited in 2022, according to a recent estimate from, and some of these forfeitures could begin as soon as March 15.

FSAs let employees stash away pretax money to be spent on qualifying medical expenses. While they can offer some big tax savings, confusion around the deadline for when the money must be spent can lead to headaches and lost money.

The standard deadline to spend FSA money is Dec. 31 of the year in which the contributions were made. 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 (EBRI).

Making matters more confusing, a temporary federal rule passed in response to the pandemic extended a full-year grace period, meaning some workers can spend last year’s contributions all the way up until Dec. 31, 2022. However, it is up to your employer to adopt the change, and it is estimated that fewer than 50% have done so.

EBRI researchers estimate that 48% of workers with a standard Dec. 31 deadline forfeit at least some of their savings, and even for workers whose employers allow a grace period, 37% end up forfeiting some of their contributions.


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