Information checked: September 9, 2026.
A health flexible spending arrangement normally follows a use-it-or-lose-it rule, but the real deadline is not identical for every employee. Your employer may offer a limited carryover, a grace period, or neither.
The plan document also separates the last day to incur an expense from the later run-out deadline for submitting claims. Confusing those dates is a common way to lose otherwise eligible money.
Key answer: For plan years beginning in 2026, the employee salary-reduction limit is $3,400. A plan that permits carryover may allow up to $680 into the next plan year. Instead, a plan may offer a grace period of up to 2½ months. These options are employer choices, and a health FSA generally cannot offer both for the same plan year.
Table of contents
- The three possible year-end rules
- 2026 FSA limits
- Grace period versus run-out period
- Expenses to review before the deadline
- What to ask the plan administrator
- Frequently asked questions
The three possible year-end rules
Your employer's health FSA will normally use one of three designs. It may forfeit the remaining balance at the end of the plan year, permit a limited carryover, or provide a grace period for incurring new eligible expenses.
The IRS sets maximums, but it does not require an employer to offer a carryover or grace period. A plan may allow less than the federal maximum. The summary plan description and administrator's year-end notice control your deadline.
2026 FSA limits
| Rule | 2026 federal maximum | Employer choice? |
|---|---|---|
| Employee salary reduction | $3,400 | Plan may set a lower election limit |
| Carryover | $680 | Optional and may be lower |
| Grace period | Up to 2½ months | Optional and may be shorter |
The carryover does not reduce the separate amount you may elect for the following plan year. Amounts over the plan's carryover limit are forfeited after applicable claim-processing rules.
Grace period versus run-out period
A grace period extends the time in which you can incur a new eligible expense. For a calendar-year plan using the full grace period, this can extend into mid-March, but use the date printed by your plan.
A run-out period is different. It is additional time to submit documentation for an expense that was already incurred during the permitted coverage period. A run-out period does not automatically make a new January or February purchase eligible against the prior year's funds.
Expenses to review before the deadline
Start with expenses you already incurred but have not submitted. Then review predictable qualified medical costs such as copayments, deductibles, prescriptions, dental treatment, vision services, eyeglasses, contact lenses, and other eligible items under the plan.
Eligibility can depend on the product and documentation. Do not buy large quantities merely to empty the account, and do not assume a general wellness product qualifies. Use the administrator's eligible-expense list and retain itemized receipts and any required letter of medical necessity.
What to ask the plan administrator
- What is the final date to incur a 2026 expense?
- Does this plan use a $680 carryover, a smaller carryover, a grace period, or neither?
- What is the last date to submit a 2026 claim?
- Which documentation is required?
- What happens to the FSA after employment ends?
- Are debit-card claims fully substantiated or is another receipt required?
Take a screenshot or save the written response. A card transaction can remain unverified, and an unsubstantiated charge may need repayment even if the merchant appeared eligible.
Frequently asked questions
Does every plan allow $680 to carry over?
No. $680 is the 2026 federal maximum. The employer may allow less or no carryover.
Can my plan offer both carryover and a grace period?
A health FSA generally may offer either option for the plan year, not both.
Is the claim deadline the same as the purchase deadline?
Not necessarily. The run-out period may let you submit an older eligible expense after the last date for incurring it.
Can the employer refund unused FSA money?
Generally no. Unused funds are subject to the plan's forfeiture, carryover, or grace-period terms.
Related guides
- HSA Contribution Limits 2027: Eligibility, Catch-Up Contributions, and Deadlines
- Health Insurance Deductible Reset 2027: What Happens to Claims in January
Final checklist
Check the plan document before spending. Confirm the expense-incurred deadline, the claim-submission deadline, and whether your plan chose the optional $680 maximum carryover or a grace period. The federal maximum does not create a benefit your employer did not adopt.