Many health FSAs can carry a limited dollar amount into the next plan year when your employer added a carryover feature.
An FSA is great when it’s boring: you set money aside, you pay eligible bills, and you move on. The stress starts when the plan year ends and you still have a balance. Some plans let you keep part of it. Some give you extra time to spend it. Some take what’s left.
The twist is simple: your employer chooses the year-end rules inside the plan. That’s why two coworkers at different companies can have totally different outcomes with the same kind of account.
What “Roll Over” Means In FSA Terms
People use “rollover” as a catch-all. In FSA paperwork, you’ll see three separate features.
- Carryover: A set dollar amount moves into the next plan year and stays available for eligible expenses during that year.
- Grace period: You get extra time after the plan year ends to incur new eligible expenses that can be paid from last year’s remaining balance (up to two months and 15 days).
- Run-out period: Extra time to file claims for expenses you already incurred during the eligible window. It’s paperwork time, not shopping time.
A run-out period can exist with either carryover or a grace period. A health FSA can’t have both carryover and a grace period for the same plan year under IRS guidance.
Can A Health FSA Roll Over Into The Next Plan Year With A Modifier?
Yes, a health FSA can roll over into the next plan year when your plan includes carryover and your remaining balance is within the plan’s cap. If your plan uses a grace period instead, your “extra time” is a spending window after year-end, not a balance rolling into the next year.
How Much Can Carry Over
The IRS sets a maximum your employer may allow. Revenue Procedure 2025-32 lists the 2026 indexed amounts: an annual health FSA salary-reduction limit of $3,400 and a maximum carryover of $680 for plans that offer carryover. Your employer can set a lower cap or no carryover at all.
How A Grace Period Works
If your plan uses a grace period, you can incur eligible expenses during an added window after the plan year ends—up to two months and 15 days. On a calendar-year plan, that often lands on March 15. You still need to file claims by the plan’s submission deadline, which can be later than the last day to incur expenses.
How To Find Your Exact Rule In Under 10 Minutes
You don’t need to guess. Use one of these quick checks, in this order.
- Benefits portal: Look for “carryover,” “grace period,” “deadline,” or “claims due.” Many administrators show this on the dashboard.
- Summary Plan Description (SPD): Open the SPD and search for “carryover” and “grace.” The SPD is the cleanest one-stop source for your plan’s rules.
- Last year’s balance line: Some portals show “carried into this year.” If you see it, your plan uses carryover.
- One email to HR: “Does our health FSA use carryover or a grace period, and what are the incur and submit deadlines?”
If you see both terms in old documents, lean on the most current SPD or plan amendment. Benefits vendors and employers do change designs over time.
What Happens If You Leave Your Job With A Balance
Most of the time, unused health FSA money does not follow you to a new employer. What you can still claim depends on two dates: your last eligible service date and the plan’s claim filing deadline.
- If you leave mid-year: Spending access often ends on your last day of employment unless COBRA applies to your health FSA or your plan allows a short post-termination spending window.
- If you leave after the plan year ends: A run-out period often lets you submit claims for eligible expenses you incurred before your access ended.
If you’re leaving with a balance, ask HR for the final day you can incur expenses and the final day you can submit claims. Those two answers usually settle it.
Carryover, Grace Period, And The HSA Catch
If you plan to contribute to an HSA, pay attention to your FSA type at year-end. A general-purpose health FSA that can pay regular medical expenses can block HSA contributions for months when that FSA coverage is still active. Some employers offer a limited-purpose FSA (often dental and vision) that can coexist with an HSA, and some allow a year-end conversion to limited-purpose so a carried balance doesn’t create an HSA problem.
If you want the primary IRS language on carryover limits and the “carryover or grace” rule, the clearest sources are Revenue Procedure 2025-32 and Notice 2013-71.
Year-End FSA Outcomes At A Glance
Use this table to match your plan’s setup to the most likely outcome. Then use the “Next step” column to avoid surprises.
| Plan setup you have | What happens to unused funds | Next step |
|---|---|---|
| Health FSA with carryover | Up to the plan’s cap moves into next plan year; the rest is forfeited | Confirm the cap and any employment requirement in your SPD |
| Health FSA with grace period | You can incur new eligible expenses during the grace window; leftover after that is forfeited | Add the last incur date to your calendar |
| Health FSA with run-out only | No rollover; you can only file claims for prior-year expenses during run-out | Gather receipts and submit early |
| Health FSA with no carryover and no grace | Unused balance is forfeited at plan year end | Schedule planned care before the year ends |
| Limited-purpose FSA with carryover | Carried funds stay usable for the allowed categories in your plan | Check which categories are reimbursable |
| Dependent care FSA | Standard health FSA carryover does not apply; many plans rely on a grace window | Track service dates for childcare |
| You leave your job with a balance | Access may end at termination unless COBRA applies or plan rules allow more time | Ask HR for the final incur and submit dates |
| You want an HSA next year | General-purpose FSA carryover or grace can block HSA contributions for part of the year | Ask about limited-purpose options at year-end |
Plan Your Spending So You Do Not Forfeit Money
Once you know your plan’s rule, planning is mostly calendar work plus a realistic estimate of your routine costs.
Use a quarterly check-in
Set one reminder each quarter. Check your remaining balance, then compare it to your remaining pay periods. If you’re sitting on a bigger balance than expected, schedule the predictable stuff sooner.
Pick expenses you can schedule
These are usually the easiest to time because you control the appointment:
- Dental cleanings, fillings, and orthodontic visits
- Eye exams, contact lens fittings, and prescription glasses
- Physical therapy sessions already in your care plan
- Prescription refills when your prescriber approves it
Separate “incur” from “submit”
This mistake causes a lot of lost money. An expense must be incurred within your eligible window. You can often submit the claim later, inside the run-out window. A late receipt is fine. A late purchase is not.
Deadlines That Matter Most (And Where To Find Them)
Your plan might list three deadlines that sound alike. They don’t mean the same thing. This table helps you read them like a pro.
| Deadline label | What it means | Where it’s stated |
|---|---|---|
| Plan year end | Last day of the plan year | SPD and benefits portal header |
| Last day to incur | Final day an expense can happen and still count | SPD and administrator calendar |
| Grace period end | End of the added spending window (if your plan has one) | SPD “grace period” section |
| Claims due / run-out end | Final day to submit receipts for eligible expenses | SPD and claims portal |
| Carryover posting date | When the carried amount shows up in the new plan year | Administrator FAQs or portal messages |
| Debit card cutoff | When the plan stops accepting new card charges | Cardholder terms in your portal |
Dependent Care FSA Rollover: Why It Feels Different
Dependent care FSAs follow a different set of tax rules and a different annual cap. Standard health FSA carryover rules don’t apply in the same way. Many dependent care plans use a grace period so you can apply leftover funds to care provided into early spring, then submit claims by the filing deadline.
Two habits that save headaches
- Match reimbursements with service dates: Reimbursements tie to when care was provided, not when you paid the invoice.
- Submit as you go: Monthly claims reduce last-minute filing issues and show your real remaining balance.
Common Mistakes That Trigger Forfeitures
- Assuming the IRS maximum is your plan’s rule: It’s a ceiling, not a promise.
- Waiting for December to check your balance: A quick quarterly check avoids panic spending.
- Using last year’s dates after a vendor change: Re-check each open enrollment season.
Can FSA Roll Over To Next Year? Your Plan Decides
If your plan includes carryover, you may see part of your balance post into the new plan year. If your plan uses a grace period, you keep time, not a carried balance. If your plan offers neither, anything left at the cutoff is gone. That’s why the SPD matters more than any generic advice online.
So, Should You Count On An FSA Rollover?
You can count on it only when your plan document says you have carryover or a grace period. Once you confirm that, the rest is timing and staying within the cap. If you want a plain-language IRS overview of FSAs and annual limit references, see IRS Publication 969.
References & Sources
- Internal Revenue Service (IRS).“Revenue Procedure 2025-32.”Lists the 2026 health FSA salary-reduction limit and the indexed carryover cap.
- Internal Revenue Service (IRS).“Notice 2013-71.”Creates the health FSA carryover option and bars using carryover and a grace period in the same health FSA plan year.
- Internal Revenue Service (IRS).“Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans.”Gives an overview of FSAs and links to the annual limit updates.