FSA Spending Clock Is Ticking: Don't Let Your Pre-Tax Funds Disappear Before Year's End

Why Your Flexible Spending Account Deadline Won’t Wait

Even as the U.S. government remains shuttered following Congress’s failure to approve new funding, one financial deadline refuses to pause: your flexible spending accounts (FSAs) contribution and spending deadlines. While federal agencies scale back operations, the rules governing these pre-tax benefit accounts march forward unchanged. If you’re banking on a government extension to buy you extra time with your FSA funds, think again—this isn’t how it works.

Understanding How Flexible Spending Accounts Function

A flexible spending account allows workers to set aside pre-tax income for qualified healthcare costs. During annual enrollment, you designate how much to contribute, and that amount gets automatically deducted from your paychecks before taxes are calculated. When you spend the money on approved medical services or products, the reimbursements come tax-free.

The math works in your favor—if you typically fall in the 22% tax bracket and contribute $3,300 (the 2025 maximum for flexible spending accounts), you’re essentially getting a 22% discount on eligible healthcare expenses through tax savings alone.

However, misuse carries consequences. Spending your FSA balance on non-qualified items triggers a 20% penalty plus regular income tax on that withdrawal. A $1,000 non-qualified expense could cost you $420 in taxes and penalties combined—a steep price most people should avoid.

The only exceptions: those 65 or older or classified as disabled dodge the 20% penalty, though the withdrawal amount remains taxable income.

The December 31 Deadline Still Applies—Shutdown or Not

Here’s where the shutdown becomes irrelevant: whatever funds sit in your flexible spending account must be spent by December 31, or they vanish. That’s the “use-it-or-lose-it” reality that defines these accounts. Some employer plans sweeten the deal by allowing up to $660 to roll into next year, while others grant a 2.5-month grace period into January. Your plan offers one option or the other—never both.

If the shutdown stretches all the way to year-end—potentially making it the longest in U.S. history—it changes nothing. Your FSA spending deadline remains firm. Similarly, open enrollment still operates on its normal timeline (typically mid-November through mid-December), meaning you must select your benefits and confirm next year’s contribution amounts regardless of government operations status.

Lesser-Known Ways to Use Up Your FSA Balance

If you’re scrambling to spend remaining funds before the calendar flips, consider these qualifying expenses beyond the typical doctor visit or prescription refill:

• Acupuncture and chiropractic sessions
• Blood pressure monitors and hearing aid batteries
• Breast pumps and prenatal vitamins
• Dental night guards and orthotic insoles
• Sunscreen with SPF 15 or higher
• Motion sickness remedies for travel

The IRS-approved list extends into the thousands. Your employer’s plan documentation or the FSA Store website can clarify exactly what qualifies under your specific account rules.

What You Must Do Now

Don’t let the government shutdown distract you from FSA essentials. Lock in your 2025 election amount during open enrollment if you haven’t already—that window doesn’t pause for federal dysfunction. Simultaneously, audit your current balance and plan purchases strategically. The deadline respects no external circumstances, only the calendar.