The 2026 health FSA limit is $3,400. Whatever is left in the account when the plan year ends is forfeited.
That is the default. The IRS calls it the use-or-lose rule. Notice 2013-71 uses that exact phrase in its title.
Two exceptions exist. Your employer can offer one of them. Your employer can offer neither. No employer is allowed to offer both.
The Default Is Forfeiture
A health FSA only reimburses expenses you incurred during the plan year. Publication 969 is blunt about it. Distributions "must be paid only to reimburse you for qualified medical expenses you incurred during the period of coverage."
Leftover money goes back to the plan. You do not get a check. It does not automatically roll into next year.
A calendar-year plan ends December 31. Not every employer runs a calendar plan year. Check yours before you build a December plan around it.
The Two Options Your Employer Can Add
| Setup | What it actually does | Maximum |
|---|---|---|
| Grace period | Extra time to incur new expenses | 2.5 months past plan year end |
| Carryover | Unused dollars move into the next plan year | $680 carried out of 2026 |
| Both | Not permitted | n/a |
| Neither | Balance is forfeited | n/a |
The grace period cap comes from IRS Notice 2005-42. The language is specific. A grace period "must not extend beyond the fifteenth day of the third calendar month following the end of the immediately preceding plan year."
For a calendar-year plan, that is March 15. Not March 31. Not "sometime in the first quarter."
The carryover cap moves with inflation. Rev. Proc. 2025-32 set it at $680 for 2026.
Notice 2013-71 created the carryover and closed the door on stacking the two. "A plan adopting this carryover provision is not permitted to also provide a grace period with respect to health FSAs."
So the useful question is not how much time you have. It is which one your employer picked.
The 2026 Numbers
| Item | 2026 amount | Source |
|---|---|---|
| Health FSA salary reduction limit | $3,400 | Rev. Proc. 2025-32 |
| Maximum carryover | $680 | Rev. Proc. 2025-32 |
| Maximum grace period | 2.5 months | Notice 2005-42 |
One detail people miss. A carryover does not eat into next year's contribution limit.
Notice 2013-71 set that out when the figures were smaller. The carryover "does not count against or otherwise affect the indexed $2,500 salary reduction limit." Both dollar amounts have indexed up since. The rule has not changed.
So $680 carried in plus a $3,400 election gives you $4,080 to spend next year.
How to Find Out Which One You Have
Four places to look, fastest first.
- ●Your FSA administrator's portal. Look for "plan year end," "grace period," or "carryover" near the balance.
- ●Your Summary Plan Description. HR has the PDF. Search it for "grace" and "carryover."
- ●Open enrollment materials. The grace period or carryover is named in the plan summary.
- ●HR or your benefits contact. Ask two questions. What is the last day to incur an expense? What is the last day to file a claim?
Those two dates are not the same date. Miss the file date and the money is gone, even though you spent it in time.
A Run-Out Period Is Not Extra Shopping Time
A run-out period is the window after the plan year to submit claims for expenses you already incurred. Your employer's plan document sets it, not the IRS. There is no IRS notice that caps it the way Notice 2005-42 caps a grace period. Your plan names the date.
Here is the trap. A grace period lets you incur new expenses. A run-out period does not.
| Feature | Buy new things? | File old claims? |
|---|---|---|
| Grace period | Yes | Yes |
| Run-out period | No | Yes |
Grace period
- Buy new things?
- Yes
- File old claims?
- Yes
Run-out period
- Buy new things?
- No
- File old claims?
- Yes
If HR says "you have until March 31," ask which one they mean. The answer changes what you should do in December.
Write down two dates. The incur date is the shopping deadline. The file date is the paperwork deadline. Missing either one forfeits the money just as completely.
What to Spend It On in December
Health FSAs and HSAs both run on the section 213(d) definition of medical care. If an expense qualifies for one, it generally qualifies for the other.
Common year-end buys that qualify:
- ●Prescription refills and copays
- ●Dental work, including the cleaning you skipped
- ●Glasses, contacts, or a contact lens supply
- ●Orthodontia payments
- ●Thermometers, blood pressure monitors, first aid supplies
- ●Sunscreen with SPF 15 or higher, broad spectrum
- ●Menstrual care products
- ●Over-the-counter medicine
Two categories to skip. General wellness purchases and fitness gear bought without a practitioner's recommendation. Wearables are their own tangle of rules. See Fitness Trackers and HSAs: Oura, Whoop, Garmin, Apple Watch Compared.
The full category list is here: What Can You Buy With an HSA? The Complete List.
One warning on December spending. Buying things you do not need to avoid forfeiting $200 is not a win. At a 22% marginal rate, that $200 saves about $44 in federal income tax. Spend it on care you were going to buy anyway.
Why HSA Holders Skip This Entirely
An HSA has no December 31 problem. Publication 969 handles it in one line. "Amounts that remain at the end of the year are generally carried over to the next year."
No forfeiture. No grace period. No carryover cap. The balance stays yours after you change jobs.
That is why HSA users track receipts instead of racing a date. There is no deadline to reimburse yourself for a qualified expense incurred after the account was opened. A 2026 receipt can become a tax-free withdrawal in 2040.
The account does not expire. The receipt is the part that has to survive.
That is why receipt tracking matters more for an HSA than for an FSA. An FSA has a deadline. An HSA has a paperwork problem instead.
The full side by side lives in HSA vs FSA: Which Health Account Is Better for You?.
One Overlap Rule Worth Knowing
A general-purpose health FSA grace period can block HSA eligibility. Publication 969 sets one condition. Coverage is allowed only "if the balance in the health FSA at the end of its prior-year plan is zero."
A leftover FSA balance riding into a grace period can cost you HSA contributions. That surprises people who switch plans in January. The details are in Can You Have an HSA and FSA at the Same Time? Mostly No.
The 2027 Numbers Are Not Out Yet
As of September 2026, the IRS has not announced 2027 health FSA figures. They arrive in an annual revenue procedure. The 2026 numbers came from Rev. Proc. 2025-32, published in the November 3, 2025 bulletin.
Do not set a 2027 election around a figure you saw on a blog. Wait for the revenue procedure.
The Short Version
- ●Default: unspent FSA money is forfeited when the plan year ends
- ●Your employer may add a grace period or a carryover, never both
- ●Grace period max is 2.5 months, so March 15 for a calendar-year plan
- ●Carryover max is $680 out of 2026, and it does not reduce next year's limit
- ●A run-out period is for filing claims, not for new purchases
- ●HSA money never expires, so there is no date to race
Call your administrator this week. Ask for the incur date and the file date. Put both on the calendar.
This is educational content, not financial or tax advice. Consult a qualified professional before making decisions about your HSA.