What To Do With Leftover FSA Money In 2020

Do you have a FSA (Flexible Spending Account) through your employer? 

If you do, you know that you’re allowed to set aside a certain portion of your income, pre-tax, to pay medical bills and childcare costs.  You also likely know that you typically have until the end of the calendar year to use those funds or you lose them permanently.  If you have leftover funds from 2020, however, Congress has just changed some of the rules.  You now have a variety of options when it comes to what to do with leftover FSA money in 2020.

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What Typically Happens At The End Of The Year

Your employer has the option to choose three different scenarios when it comes to what happens to your FSA money at the end of the year.

Healthcare FSA With Carryover

If your employer chooses this plan, you can roll over $500 in unspent funds from one year to the next.

Healthcare FSA With Grace Period

Under this option, you’re given a certain amount of time, usually 2.5 months after the end of the calendar year to use the remaining funds from the previous calendar year.

Standard Healthcare FSA

Under this plan, you’re only allowed to use the funds during the calendar year.  If the year ends and you still have money in your FSA, you forfeit those funds.

What Can Happen In 2020 And 2021

Under the new stimulus act that President Trump signed in late December, the rules for FSA funds have changed.  Now, FSA will rollover any leftover funds from 2020 to 2021.  The same rule will apply in 2021.  Any leftover funds from 2021 will rollover into 2022. 

This is a temporary change for these two years only (unless Congress plans to extend the law at a later date).  In addition, this change is not automatic.  Your employer must approve it, but likely most employers will.

How To Use Leftover Healthcare FSA Money

If you find yourself with a lot of leftover FSA money, there are ways to use it that you may not have considered.

Unusual Ways To Use Healthcare FSA Money

Of course, you’re familiar with using Healthcare FSA money for things like co-pays at the doctor, specialists, dentists, and psychologists.  However, there are other ways to use your FSA funds that you may not have thought of.

Feminine Care Products

FSA participants can purchase some feminine care products that are covered under FSA including some brands of pads and the expensive period panties.  You’ll need to check with your FSA provider first.  However, this year, I bought some of my children’s period panties at $18 a piece, and FSA reimbursed me for that expense. 

Other Items

A surprising variety of other items may qualify including over the counter medicines and allergy pills, COVID-19 test kits, antacids, and thermometers.

If your employer allows you to use the FSA store, you can go there to see the wide variety of items that are covered under your FSA.  I think you will be pleasantly surprised.  I was!


As always, if you’re not sure if any expense qualifies, check with your FSA administrator first and get approval so you’re not stuck with a purchase that is not qualified.

Final Thoughts

If you have an FSA, remember that in 2020 and 2021, the U.S. government (and your employer, if they sign on), is allowing unprecedented flexibility in the use of your funds.  In addition, many items may qualify for FSA purchase that previously did not.  There’s never been a better time to have a Healthcare Flexible Spending Account.

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