Most health spending accounts do not roll over—the money is yours to use or lose by December 31

Health Savings Accounts (HSAs) roll over indefinitely. Any balance you don't spend stays in your account year after year, and you can withdraw it tax-free for medical expenses whenever you need it, even decades later.

Flexible Spending Accounts (FSAs) and Dependent Care FSAs do not roll over. Money left unspent at the end of the plan year is forfeited—your employer keeps it. The only exception is a small carryover amount (up to $640 in 2024, though this varies by year and employer) that some plans allow, plus a grace period of up to 2.5 months into the next year to spend the previous year's balance.

The difference matters because it changes how you should think about contributing. With an HSA, you can afford to contribute more because unused money stays yours. With an FSA, you need to estimate carefully what you'll actually spend, because guessing wrong means losing money.

Key Takeaways

  • HSA balances roll over every year and never expire, so money you don't spend this year remains available for medical costs in future years.
  • FSA and Dependent Care FSA balances do not roll over—unspent money is forfeited at the end of the plan year, with limited exceptions.
  • Some employers offer a $640 carryover (the 2024 limit) or a grace period extending into the next year, but you must check your specific plan document to know which applies.
  • HSAs are the only health account that works like a true savings vehicle; FSAs are designed to be spent down each year.

How HSA rollovers work across years

An HSA is a savings account attached to a high-deductible health plan. Any money you contribute stays in the account permanently unless you withdraw it. There is no "use it or lose it" rule. If you contribute $3,000 in 2024 and spend only $1,200, the remaining $1,800 sits in your HSA and can be used for medical expenses in 2025, 2030, or 2050.

This is why HSAs function as retirement accounts—they appear in the "IRA & Retirement Accounts" category here. You can invest the balance in stocks, bonds, or mutual funds (depending on your HSA provider), and the growth is tax-free as long as withdrawals go toward medical expenses. Once you turn 65, you can withdraw money for any reason, though non-medical withdrawals are taxed as income.

The rollover is automatic. You do nothing to preserve the balance. It straightforward stays in your account as long as you maintain the HSA and remain enrolled in a high-deductible health plan.

FSA forfeiture and the limited carryover option

A Flexible Spending Account is structured differently. Your employer sets up a plan year (often January through December, sometimes different dates), and you contribute pre-tax dollars to cover medical or dependent care expenses during that year. At the end of the plan year, any unspent balance is forfeited. Your employer or the plan administrator keeps the money.

This is called the use-it-or-lose-it rule, and it exists because of tax law: FSA contributions are made with pre-tax dollars, and the IRS does not allow you to carry over unused pre-tax money indefinitely. The forfeiture is meant to prevent people from accumulating large tax-advantaged balances.

However, employers can offer two limited exceptions. First, a carryover: you can carry up to $640 (in 2024) of unspent FSA balance into the next plan year. Not all employers offer this—it is optional. Second, a grace period: you can have up to 2.5 months after the plan year ends to spend the previous year's balance. For example, if your plan year ends December 31, you might have until March 15 to submit claims for 2024 expenses. Again, not all employers offer this, and some offer one, the other, or neither.

You must check your plan document or ask your benefits administrator which option (if any) your employer provides. The rules vary widely.

Dependent Care FSA carryover and grace period rules

Dependent Care FSAs follow the same forfeiture rule as medical FSAs, but the carryover limit is different. You can carry over up to $5,000 (not $640) of unspent Dependent Care FSA balance into the next year, if your employer's plan allows it. The grace period works the same way: up to 2.5 months to spend the previous year's money.

Dependent Care FSAs are used to pay for childcare, adult day care, or elder care expenses. Because these costs can be unpredictable—a child gets sick, a caregiver cancels—the higher carryover limit ($5,000 versus $640) reflects the reality that families may have trouble predicting their exact spending.

As with medical FSAs, you need to verify what your specific plan offers. Some employers provide the carryover, some the grace period, some both, and some neither.

Why the difference between HSA and FSA matters for your contribution strategy

Because HSA money rolls over forever, you can contribute more aggressively. If you have a high-deductible health plan and can afford to set aside $4,000 per year, you can do so knowing that any unused amount stays in your account. Over time, this builds a medical savings cushion that you can draw from in retirement or during years when you have large medical expenses.

With an FSA, you should contribute only what you are confident you will spend in that plan year. Overestimating by even $500 means losing $500. This makes FSAs better suited to people with predictable medical expenses—regular prescriptions, ongoing therapy, scheduled procedures—rather than people with uncertain costs.

If you have both an HSA and an FSA (which is possible if your FSA is limited to dependent care), prioritize the HSA for long-term savings and use the FSA to cover predictable near-term expenses.

What happens if you change health plans mid-year

If you leave a high-deductible health plan, your HSA does not close. The balance remains yours permanently, even if you switch to a regular health plan. You can no longer make new contributions to the HSA (because you are no longer on a may have access to plan), but the existing balance stays in the account and can be withdrawn for medical expenses anytime.

If you leave an employer that offers an FSA, the situation depends on timing. If you leave mid-plan-year, you typically forfeit the unspent balance when ready, unless your employer's plan allows you to continue coverage under COBRA (which is rare for FSAs). Some employers allow you to submit claims for expenses incurred before you left, but only within a limited window. Check with your benefits administrator about the specific rules.

Claiming expenses after the plan year ends

For both HSAs and FSAs, there is a distinction between when you incur an expense and when you claim it. You can incur a medical expense in December and submit the claim in January or later, as long as you are within the allowed window.

For HSAs, there is no important date. You can incur an expense in 2024 and submit the claim in 2030. This flexibility is another reason HSAs function as retirement accounts.

For FSAs, the important date is typically the end of the grace period (if your plan offers one) or the end of the plan year (if it does not). If your plan year ends December 31 with no grace period, you must submit claims for 2024 expenses by December 31. If your plan offers a 2.5-month grace period, you have until mid-March to submit claims for 2024 expenses. Your plan document specifies the exact date.

Frequently Asked Questions

Can I roll over my FSA balance if I change jobs?

No. FSA balances are tied to your employer's plan and do not transfer when you leave. Any unspent balance is forfeited when your coverage ends, unless your employer allows COBRA continuation (uncommon for FSAs). Your HSA, by contrast, moves with you—it is your account, not your employer's.

What if my employer offers both a carryover and a grace period?

You can use both. You can carry over up to $640 (or $5,000 for Dependent Care) into the next year, and you also have 2.5 months into the next year to spend the previous year's balance. The grace period applies to both the carried-over amount and any new contributions made in the new plan year.

If I have an HSA, do I still need to worry about the use-it-or-lose-it rule?

No. HSAs have no use-it-or-lose-it rule. The balance rolls over indefinitely. However, if you also have an FSA (typically for dependent care), that FSA still has the forfeiture rule and requires separate planning.

Can I withdraw HSA money for non-medical expenses?

Yes, but with a tax cost. Before age 65, non-medical withdrawals are subject to income tax plus a 20% penalty. After 65, non-medical withdrawals are taxed as income but not penalized. This is why HSAs work as retirement accounts—after 65, they function like traditional IRAs.

How do I know if my FSA plan offers a carryover or grace period?

Check your plan document (usually available through your employer's benefits portal) or contact your benefits administrator directly. The rules vary by employer and plan year, so you cannot assume your plan offers either option.