What is the FSA grace period?
The FSA grace period is an optional plan feature that allows employees to use prior-year FSA funds for expenses incurred up to 2.5 months after the plan year ends. For a December 31, 2026 plan year end, the grace period extends to March 15, 2027.
During the grace period, you can use your leftover 2026 FSA balance for any eligible expense incurred between January 1 and March 15, 2027 — even though the 2026 plan year has ended.
Grace period vs rollover vs neither
| Option | Extra time | Extra money | Best for |
|---|---|---|---|
| Grace period | Until March 15, 2027 | Full unused balance available | People with large year-end balances |
| Rollover | None | Up to $640 rolls to 2027 | People with small consistent balances |
| Neither (hard deadline) | None | All unused funds forfeited | Must spend by December 31 |
Key rule: Employers can offer a grace period OR a rollover, but not both. And they're not required to offer either. Check your plan documents to confirm which option you have before making spending decisions.
How to find out if you have a grace period
Three ways to check:
- Your FSA benefits portal — log in and look for plan details, end date, or rollover information
- Your Summary Plan Description (SPD) — search for "grace period," "rollover," or "run-out period"
- Ask HR directly — "Does our FSA plan offer a grace period or rollover, or is December 31st the hard deadline?"
The run-out period — different from the grace period
Even if your plan has no grace period, you likely have a run-out period — typically 90 days after the plan year ends — to submit claims for expenses incurred during the plan year. This means you can see a doctor December 30th and submit the claim in February. But the run-out period only covers submission of existing expenses — you can't incur new expenses after December 31st and claim them from the prior year (unless you have a grace period).
What if you have too much left at year end?
If you consistently have large year-end FSA balances, consider reducing your annual election for the following year. It's better to under-elect slightly and pay some expenses out of pocket than to forfeit money back to your employer. Use your prior year's actual spending as your guide for next year's election.
Check what qualifies before your deadline
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