Research Shows Significant Forfeiture of Unused Health Flexible Spending Account Funds
A new report from the Employee Benefit Research Institute (EBRI) reveals that approximately 40% of health Flexible Spending Account (FSA) holders forfeited unused balances in 2024. Among those who lost funds, the average forfeiture was $404, a slight decrease from $436 in 2023. The study analyzed over 3.3 million accounts totaling $3.9 billion in contributions. Despite these losses, experts note that employees may still achieve a net financial gain if their tax savings from using pretax dollars exceed the amount forfeited. Unlike Health Savings Accounts (HSAs), which allow for balance rollovers and investments, FSAs are often subject to 'use it or lose it' rules, though some employers offer grace periods or limited carryover amounts. The IRS has announced that maximum FSA contribution limits will rise to $3,400 for 2026 and $3,500 for 2027. Financial experts advise workers to closely monitor their specific plan deadlines and employer-specific rules regarding grace periods to minimize wasted funds.
Topics: Employee benefits Financial research FSA forfeiture Health Flexible Spending Accounts