Your FSA Money Expires December 31

People confuse these two constantly, and the confusion runs in the expensive direction: someone with a health savings account rushes to spend in December for no reason, or someone with a flexible spending account assumes the balance will be waiting in January.

A health savings account works differently in the way that matters here. The money is yours. It does not expire at year-end, it stays with you when you change jobs, and an unspent balance simply carries forward. HSAs are paired with high-deductible health plans and have their own eligibility rules, but the deadline pressure that drives this page does not apply to them.

So the first thing to establish is which account you actually have. The plan documents or the benefits portal will say. If it is an HSA, you can stop reading for urgency and read the rest for planning. If it is an FSA, there is a clock.

Here is the practical problem with a December FSA balance. The forfeiture rule pushes people toward whatever is easy to buy quickly, which is how the last week of the year turns into a pharmacy trip for things nobody needed.

Diagnostic testing is a better use of the same money, for a reason that has nothing to do with the deadline. It produces information you did not have. Medical care costs incurred for diagnosis are a recognized category of medical expense under IRS rules, and diagnostic testing is commonly listed as FSA-eligible by plan administrators — which is not the same as a guarantee that your plan covers a specific test, a point this page returns to below.

Two things are worth looking at if you are over forty-five and the balance is sitting there:

A comprehensive lab panel. Metabolic markers, the full lipid picture including the particle-count markers most routine panels skip, liver and kidney function, thyroid, inflammatory markers, nutrient status and hormones. Most people's last blood draw was ordered to answer one narrow question, and a broad baseline answers a different set. The comprehensive panel is the version of that we run, and lab testing explains what each marker is for.

A continuous glucose monitor. A short wearing period shows the pattern that a fasting glucose and an A1c cannot — what actually happens after meals, overnight, and under a normal week of eating. The CGM page covers who it helps and, just as usefully, who it does not.

Both are measurement rather than treatment, which is also why they sit comfortably at the start of a year rather than the end of one. The result is something you carry into January.

Three things have to be said plainly, and a page that skipped them would be doing you a disservice.

Eligibility depends on your specific plan and on current IRS rules. Plans differ in what they reimburse, administrators interpret categories differently, and the rules change. We are not going to tell you that any particular ACT 2 service is FSA-eligible for you, because we do not administer your plan and cannot know.

Some items require a letter of medical necessity. Where an expense could be either medical or general wellness, an administrator may ask for written documentation from a clinician explaining why it is being used to treat or diagnose a specific condition. Whether yours asks, and for what, is a question for the administrator — ask before you buy, not after.

This is not tax advice. It is a description of how these accounts generally work, written to help you ask better questions. For your own situation, talk to your plan administrator, and to a tax professional if the amounts matter.

The single most useful thing you can do this week is contact your plan administrator and ask four questions: what is my plan year end date, what is my current balance, does this plan offer a carryover or a grace period, and is this expense eligible without a letter of medical necessity. Get the answers before you spend.