FSA Grace Period: How It Works
An FSA grace period is a short window after your plan year ends when you can spend any remaining balance. Grace periods last up to 2 months and 15 days and typically end mid-March.
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Short answer
An FSA grace period is a short window after your plan year ends during which you can spend any remaining balance from that year. If your plan offers a grace period, you typically have until mid-March to spend money left over from the prior year before it's forfeited under the use-it-or-lose-it rule. Not all plans offer a grace period. Your plan document tells you whether yours does and the exact deadline. Only FSAs have grace periods. HSA balances roll over automatically with no deadline. HRA rules follow your employer's plan design.
A grace period is one option for dealing with unused FSA money. The other option is carryover, which lets you roll up to $680 into the next year, but a plan can only offer one of these two. If your plan offers neither grace period nor carryover, any unused balance at the end of the plan year is forfeited.
The FSA grace period rule
Use-it-or-lose-it is the FSA rule: unused money remaining at the end of your plan year is forfeited unless your plan adopts an exception. The grace period is one such exception. If your plan offers a grace period, you get extra time after the plan year ends to spend the prior year's remaining balance before it's lost. The grace period is "a period of up to two months and 15 days after the end of a plan year during which a participant may use amounts remaining from the previous plan year". A grace period typically runs from January 1 through mid-March if your plan year is January through December, but the exact dates are set by your plan.
A grace period and carryover are mutually exclusive. A plan cannot offer both. If your plan offers a grace period, it does not offer carryover. IRS guidance is clear: a plan with carryover "is not permitted to also provide a grace period with respect to health FSAs". If your plan offers neither grace period nor carryover, the use-it-or-lose-it rule applies in full, and any balance at year-end is forfeited.
How to find out which applies to you
Your plan's rules are written in your employer's benefits handbook or plan document. You need to know three things: your plan year end date, whether your plan offers a grace period (and if so, the deadline), or whether it offers carryover instead.
Where to find this information
Your employer's summary plan description or benefits handbook. Look for sections on grace period, carryover, use-it-or-lose-it, or plan year.
Your FSA administrator's website or benefits portal. Log in and search for plan rules or frequently asked questions about deadlines.
Ask your HR or benefits team directly. Questions to ask: Does our plan offer a grace period? If so, what is the deadline? When does our plan year end?
What the plan document tells you
The plan document will state whether the grace period is offered and, if so, the exact deadline (e.g., March 15). If you see no mention of grace period, your plan may offer carryover instead, or it may have neither and enforce use-it-or-lose-it strictly. The document should also state your plan year (typically January 1 through December 31, but not always).
The dates: plan year, grace period, run-out period, carryover, and how they differ
FSA deadlines and spending windows depend on what your plan offers. Here is how each mechanism works.
Grace period end date
If your plan offers a grace period, the deadline is the final day you can spend the prior year's remaining balance on eligible expenses. For a plan year ending December 31, the grace period typically extends 2 to 2.5 months into the next year, ending around mid-March. Check your plan document or administrator's website for the exact date. After the grace period ends, any balance still remaining is forfeited.
Plan year end date
Your plan year end date is when the use-it-or-lose-it rule takes hold. For most employees, the plan year ends December 31. Some employers use a different fiscal year (e.g., July 1 through June 30). Your plan document specifies your plan year. This is important because the grace period (if offered) runs from the plan year end, not from the calendar year.
Run-out period
Separate from the grace period is the run-out period, a window during which you can submit claims for expenses you already incurred and paid for during the plan year that just ended. A run-out period is "a period immediately following the end of a plan year during which a participant can submit a claim for reimbursement of expenses incurred for qualified benefits during the plan year". During the run-out period, you are claiming reimbursement for past medical expenses, not spending new money. The IRS does not mandate a specific run-out period length. Your plan document sets the deadline.
Carryover (the alternative to grace period)
If your plan offers carryover instead of a grace period, any unused balance up to the annual cap rolls into the next plan year automatically. For 2026, "the maximum carryover amount is $680". Any amount over $680 is forfeited, but the carryover sits on top of next year's salary reduction limit and does not reduce it. You have the full next plan year (typically 12 months) to spend the carryover balance. Carryover and grace period are not offered together.
What to do with a balance before the grace period ends
If your plan offers a grace period, the strategy is simple: spend the balance before the grace period deadline. Once it ends, any money left is forfeited.
Use the grace period to plan spending
The grace period gives you a few weeks after the plan year ends to finalize spending. Many people use this time to stock up on eligible items or schedule services. Common items people buy with a grace period balance include over-the-counter medicines (pain relievers, allergy medications, cold remedies, antacids, sleep aids), hearing aid batteries, glasses or contacts, first-aid supplies, or topical creams. You can also pay out of pocket for a medical appointment or service and request reimbursement during the grace period.
Submit claims during the run-out period
The run-out period overlaps with or follows the grace period, depending on your plan. During the run-out period, you can submit claims for expenses you incurred during the plan year that just ended. An expense counts if it was incurred (service delivered or product purchased) during the plan year, even if you request reimbursement later. For example, if your plan year ended December 31, a doctor visit on December 15 can be claimed in January or February if you have receipts and submit during the run-out window.
If your plan offers carryover instead
If your plan offers carryover and no grace period, you don't have a grace period deadline. Unused money (up to $680 for 2026) automatically rolls to the next plan year, and you can spend it throughout that year on eligible expenses. This removes the deadline pressure but means you need to track the carryover balance separately for accounting purposes.
Getting it reimbursed with Burst
When the answer is 'with a letter', this is the letter. Request it from Burst in about two minutes, a licensed clinician reviews it, and it's typically in your inbox within 24 hours. $35 once. Burst then files the reimbursement claim with your FSA, HSA or HRA administrator, and the administrator pays you out of your account by deposit or check. If no letter is issued you pay nothing, and if the claim is denied you get the $35 back. One timing rule: the letter has to be dated on or before the purchase it covers, so request it first.
Frequently asked questions
When does my FSA grace period end?
If your plan offers a grace period, it typically lasts up to 2 months and 15 days after the plan year ends. For a plan year ending December 31, the grace period usually ends mid-March. Check your plan document or benefits administrator for the exact deadline.
What is the March 15 FSA grace period deadline?
March 15 is a common grace period end date for plans with a January-December plan year. It is the deadline to spend any remaining balance from the prior year. This date is set by your employer's plan, so confirm the exact date with your administrator.
Can I use my FSA balance during the grace period?
Yes. If your plan offers a grace period, you can spend the prior year's remaining balance on eligible medical expenses during that window. After the grace period ends, any unspent balance is forfeited.
What is the difference between a grace period and carryover?
A grace period gives you extra weeks (up to 2 months 15 days) after the plan year ends to spend the remaining balance. Carryover rolls up to $680 into the next year so you have 12 months to spend it. A plan can offer one or the other, not both.
Does my HSA have a grace period like my FSA?
No. HSA balances roll over automatically with no deadline or grace period. The grace period is an FSA feature only. HRA rules follow your employer's plan design.
What if my plan doesn't offer a grace period?
If your plan offers neither grace period nor carryover, the use-it-or-lose-it rule applies. Any balance at the end of your plan year is forfeited. Some plans offer carryover instead of a grace period, allowing up to $680 to roll into the next year.
Keep reading: FSA Deadlines: Every Date That Matters, How Much Should I Contribute to My FSA?, Deadlines, Limits and Plan Rules, and all guides on this topic.
Sources
IRS Notice 2013-71 (grace period definition, run-out period definition, use-it-or-lose rule, carryover and grace period exclusivity)
IRS newsroom: tax inflation adjustments for tax year 2026 (2026 FSA carryover maximum of $680)
IRS Publication 969 (HSA automatic carryover with no deadline)
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