According to a report from the Employee Benefit Research Institute, approximately 40% of workers with health FSAs forfeited unused funds in 2024, with an average forfeiture of $404, down from $436 in 2023. This data was derived from an analysis of over 3.3 million accounts totaling $3.9 billion in contributions.
Despite the forfeitures, Jake Spiegel, a senior research associate at EBRI, noted that even if funds are lost, participants may still benefit if their tax savings exceed the amount forfeited. The report highlights that access to FSAs has increased, with 72% of state and local government workers and 47% of private-sector workers having access in 2026, compared to 68% and 40% in 2017.
FSAs operate under a 'use it or lose it' policy, although some employers allow carryovers or grace periods. The maximum contribution for 2026 is set at $3,400, increasing to $3,500 in 2027. Employees are encouraged to carefully estimate their healthcare expenses to avoid forfeiting funds.
Certified financial planner Sean Lovison emphasized that as long as the forfeited amount is less than the tax savings from the FSA, participants still come out ahead financially. Additionally, there are numerous eligible expenses for FSA funds, including over-the-counter medications and health-monitoring devices, which can help employees utilize their balances effectively before year-end deadlines