FSAFEDS: the one election that doesn't roll over

The three accounts

• Health care FSA. Pays medical, dental and vision costs your insurance does not cover: deductibles, copays, glasses, orthodontics.
• Limited expense health care FSA. Dental and vision only. This is the version that works alongside a health savings account.
• Dependent care FSA. Childcare, after-school care and day care for an adult dependent, so that you can work.

All three take money out of pay before federal income tax and payroll taxes are calculated. That is the whole point: a dollar spent through an FSA costs you less than a dollar out of your bank account.

Why it ends without you

FEHB and FEDVIP carry into the next year on their own. FSAFEDS is a fresh annual election every time, and if you do not make it during Open Season your account simply stops on December 31.

There is no grace, no late enrollment and no appeal. The next chance is the following Open Season, or a qualifying life event during the year.

The one saving detail: the health care FSA gives you the whole year's election from day one. Elect $2,400 in January and you can spend all of it in February, even though you have only contributed a fraction of it.

Limits and carryover

For the 2026 plan year the figures were:

The IRS publishes the 2027 figures in October or November, so those numbers are last year's until the new ones land. Two details worth holding onto: the carryover only happens if you re-enrol for the following year, and the dependent care account has no carryover at all, just a grace period into mid-March to spend what is left.

If you are in an HSA plan

A general-purpose health care FSA disqualifies you from contributing to a health savings account. If you are in an FEHB high deductible plan, the limited expense account is the compatible one, covering dental and vision while leaving your HSA eligibility intact.

Choosing the wrong one here is expensive, because excess HSA contributions have to be withdrawn and can carry a penalty. The HDHP and HSA guide covers the interaction in more detail.

Choosing an amount

• Start from what you actually spent this year, not what you fear you might spend.
• Add anything scheduled: braces, a crown, new glasses, a procedure you have been putting off.
• Subtract what your plan covers outright.
• Then hold back a margin, because above the carryover limit anything unspent is gone.

Under-electing costs you a little tax. Over-electing costs you the money itself.

Common questions