Understanding FSA Deadline Extensions: 6 Facts about the March 15 FSA (Flexible Spending Account) Grace Period from FSA Store®

FSA Store^® experts clarify deadline misconceptions to help an estimated 70% of account holders avoid forfeiting an average of $463 in unused funds to a missed deadline

DALLAS, Jan. 28, 2026 /PRNewswire/ -- According to FSA Store^® experts, approximately 70% of people who are enrolled in FSAs have some type of deadline extension. However, low understanding of how deadlines and eligibility work leads nearly half of these individuals to forfeit on average $463 in unused funds each year, according to data from VISA. To reverse this trend, FSA Store^®, the first and leading online store dedicated to selling only products and services that can be paid for with tax-free flexible spending account (FSA) funds, addresses common misconceptions and misrepresentations of FSA rules related to the March 15 grace period deadline, the FSA carryover, and FSA eligibility in the following list of six facts all FSA users should know.

1. Most FSA funds expire. All FSAs have an annual spending deadline by which time money in the account must be spent or it is forfeited, with limited exceptions. HSA funds, on the other hand, do not expire, and all unused funds roll over from year to year. Deadlines also apply to most Limited Purpose FSAs, which cover vision and dental expenses like annual exams, eye glasses, contacts and more.
2. The FSA grace period or runout period gives you more time to spend funds. While December 31 is the most common FSA deadline, your employer may offer a grace period or a runout period. A grace period gives you an extra 2.5 months after the plan year end date – typically December 31, which would make your grace period deadline March 15 of the new year – during which you can continue to spend down FSA funds from the previous year on new expenses. A runout period is a timeframe after your plan year ends – usually 90 days – during which you can still submit claims for reimbursement of expenses you incurred during the prior year (in this case, expenses incurred during 2025).
3. A partial rollover of FSA funds allows you to carry over funds from year to year. If your employer offers an FSA carryover or rollover, you can carryover up to $660 in unused FSA funds from 2025 to 2026. Check with your HR department or your FSA administrator to see if your employer offers this option.
4. Employers cannot offer both a grace period and carryover at the same time, and do not have to offer any extension at all. An FSA may have a carryover option or a grace period, but not both, and/or a run-out period may also apply to either deadline extension. Deadline extensions are completely optional and are determined by the employer, so many FSAs may have no extension available at all.
5. Additional documentation is required for certain expenses. At deadline time, it's common to see advertisements for FSA-eligible products and services from a wide variety of brands and retailers. However, what these ads often fail to mention is that you may need a letter from your doctor (called a Letter of Medical Necessity or LMN) before your FSA administrator will approve the purchase. To avoid potential eligibility delays or rejected claims, use the comprehensive FSA Eligibility List™ at FSA Store^® , and if an LMN is indicated, contact your FSA administrator or HR team for next steps. 
6. FSA funds can be used for gifts for yourself or your qualified dependents. Give the gift of good health to qualified dependents (including children through the age of 26 who qualify under your FSA). Whether you're purchasing acne patches and SPF lip balms or investing in high-tech devices like an Oura Ring, WHOOP Life Wearable Health & Activity Tracker, a Caring Mill™ by Aura heated massage gun, or a Dr. Dennis Gross light therapy mask, FSA funds deliver high-value healthcare support to your family. Note that the IRS does not allow "stockpiling" of items with FSA funds, so be sure not to purchase more of any single item than you will use within a given plan year.

"While no one likes deadlines, it's important to understand that the potential tax savings of an FSA outweigh the risk of forfeiture," said Rachel Rouleau, chief compliance officer for Health-E Commerce^®. "Employees forfeited an average of $463 from their FSA funds last year. While we hope to see this number decrease with the thousands of ways consumers can responsibly spend down their FSA dollars, even if you do forfeit, the tax savings typically outweigh the lost funds. For example, if you contributed the maximum amount of $3,300 to your FSA in 2025 and you forfeit the average of $463, your approximate annual tax savings will be $990 (depending on your tax bracket), so it was still worth the election."

Take these steps to avoid forfeiting FSA funds:

1. Check your FSA balance and your FSA deadline. Check with your employer or FSA administrator for this information. You may even have access to your FSA information via an online portal through your FSA administrator.
2. Use account management tools at FSA Store^®, including an interactive deadline spending tool, product bundles, and the ability to shop by price to align with remaining funds.
3. Use the searchable FSA Eligibility List™ at FSA Store^® and shop more than 2,500 exclusively FSA-eligible products. Our specially trained FSA customer service representatives are available 24/7 via online chat or telephone to answer your deadline questions.

To learn more about FSA deadlines and how to spend funds, visit FSAstore.com.

About Health-E Commerce^®
Health-E Commerce^® is the parent brand to FSA Store^® and HSA Store^®, online stores that serve the 70+ million consumers enrolled in pre-tax health and wellness accounts. The company also created Caring Mill^®, a popular private-label line of health products through which a portion of every purchase is donated to the Children's Health Fund. Since 2010, the Health-E Commerce^® brands have led the direct-to-consumer e-commerce market for exclusively pre-tax health and wellness benefits. Health-E Commerce^® plays an essential role in expanding product eligibility for important new categories within the list of eligible medical expenses.

SOURCE Health-E Commerce