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You may be able to carry over your entire FSA balance this year

Although funds in the flexible spending account generally must be spent by December 31, many workers have an additional 12 months to use their 2021 contributions to cover eligible medical expenses.

Medical FSAs, also known as healthcare FSAs, allow workers to set aside pre-tax money for eligible expenses that insurance does not cover. Under normal circumstances, if an account holder does not use all of the money in their account by the end of the year (usually the end of the calendar year), they can carry over up to $550 to the following year, or spend during a grace period of two and a half months, depending on their employer.

This leads to many people spending their accounts in the last weeks of every year so as not to lose. Always, workers lose about $400 million per year, according to, which sells eligible healthcare products.

But Congress changed the rules for 2020 and 2021 during the Covid-19 pandemic as many households weren’t using their FSA dollars due to canceled or delayed medical appointments.

Now, employees may be able to carry over all of their unused health funds from 2021 to 2022 if their workplace has opted in to the changes, according to the IRS (this is also true for FSAs for dependents). The maximum the IRS allowed workers to contribute this year was $2,750, but employers may have lower contribution limits.

Healthcare BSAs can be used for a variety of medical expenses, ranging from prescriptions to coinsurance payments to franchises. Also currently, workers can use FSA funds to pay for over-the-counter drugs without a prescription, such as Tylenol and other pain relievers, and feminine care products for the first time. Expenses you might not expect, such as sunscreen, are also eligible.

That said, you also need to make sure you’ve spent all of your 2020 FSA dollars, as the extension deadline to use them is likely December 31, 2021 (plan years may vary depending on employer).

Consideration should be given to the amount of FSA money you can carry forward during open enrollment this year, as this could affect your contributions for 2022. If you carry over the full $2,750, for example, you you may not contribute as much next year.

If you are unsure whether or not your 2020 and 2021 dues have been deferred, you can check with your benefits department.

Workers can use a site like FSA Store Where HealthProductsForYou to search for FSA-eligible necessities, and pharmacies like CVS usually note when a product is FSA or HSA eligible. Amazon also has an FSA section.

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Don’t miss: You can now use your FSA or HSA funds for over-the-counter drugs and feminine care products