As the calendar winds down, so do many people’s remaining health insurance benefits, Flexible Spending Account (FSA) balances, and Health Savings Account (HSA) strategies. Year-end is a powerful opportunity to prioritize preventive care, finish ongoing treatments, and plan smart purchases with dollars you’ve already set aside. This comprehensive guide breaks down what to do now, how to avoid forfeiting funds, and the best ways to stretch every penny—without tying your plans to any specific provider or practice.
Why “Use It or Lose It” Matters
Many insurance plans reset on January 1. That means annual deductibles, out-of-pocket maximums, and covered service limits often start over. If you’ve already met your deductible—or are close—finishing planned care before year-end can significantly reduce your out-of-pocket cost. In parallel, most FSAs have strict use-it-or-lose-it rules, while HSAs carry over but still benefit from strategic contributions and year-end purchases. Ignoring these timelines can leave money on the table.
Key Takeaway: Year-end planning helps you maximize insurance benefits, avoid FSA forfeitures, and deploy HSA funds wisely while improving your overall health.
FSA vs. HSA: What’s the Difference?
Understanding account rules is crucial for making the right moves in November and December.
Flexible Spending Account (FSA)
-
Funding: Pre-tax payroll deductions set by your employer.
-
Ownership: The account is employer-sponsored.
-
Rollover & Grace Period: Most healthcare FSAs follow “use it or lose it,” but your employer may opt for either a rollover (up to an IRS-set amount) or a grace period (typically 2.5 months into the new year). Plans cannot offer both simultaneously.
-
Eligible Expenses: Copays, deductibles, approved over-the-counter items, medical devices, vision and hearing products, and more.
-
Dependent Care FSA (DCFSA): Separate account for child or dependent care expenses; has distinct eligibility rules and strict deadlines.
Health Savings Account (HSA)
-
Funding: Pre-tax payroll deductions or direct contributions (potentially tax-deductible).
-
Ownership: The account is yours (portable if you change jobs).
-
Rollover: Funds roll over indefinitely; there is no use-it-or-lose-it rule.
-
Eligibility: You must be covered by a High-Deductible Health Plan (HDHP) and have no disqualifying coverage.
-
Triple Tax Advantage: Pre-tax contributions, tax-free growth, and tax-free distributions for qualified medical expenses. After age 65, you can withdraw for any reason (ordinary income taxes apply if not for medical).
Bottom Line: FSAs demand year-end action to avoid forfeiture. HSAs reward long-term strategy, but year-end is still ideal for maximizing contributions and planning purchases.
Year-End Benefits Checklist
Use this step-by-step checklist to make sure you squeeze every bit of value out of your benefits.
-
Review your insurance dashboard.
-
Check your deductible status, out-of-pocket maximum, and annual visit limits (e.g., therapy sessions, specialist visits).
-
If you’re close to or have met your deductible, consider finishing planned procedures now for lower out-of-pocket costs.
-
-
Audit your FSA balances.
-
Note your remaining balance, claims deadlines, and whether your plan offers a rollover or grace period.
-
Confirm the documentation required for reimbursements and save all receipts.
-
-
Top off your HSA if appropriate.
-
If you have the budget, consider contributing up to the annual IRS limit to maximize tax advantages.
-
If you anticipate medical expenses early next year, stocking your HSA now can ease cash flow later.
-
-
Schedule overdue appointments.
-
Annual physicals, routine screenings, therapy follow-ups, vision exams, hearing tests, and specialist consultations often fill up in December. Book early.
-
-
Plan eligible purchases.
-
Use FSA/HSA-eligible expenses: prescription eyewear, contact lenses, OTC medications, first-aid supplies, blood pressure monitors, glucose meters, sunscreen (SPF 15+), braces and supports, menstrual care products, and more (check your plan’s eligible list).
-
-
Handle prescriptions and renewals.
-
Request refills, consider 90-day prescriptions if covered, and ensure necessary prior authorizations are in place.
-
-
Track dependents’ needs.
-
For Dependent Care FSAs, reconcile receipts for daycare, after-school programs, or elder care and submit claims by the deadline.
-
-
Check open enrollment options.
-
Year-end often coincides with open enrollment. Compare plan designs, monthly premiums, HSA-eligible HDHPs, and employer matching on FSAs or HSAs.
-
Maximizing FSA Dollars Before They Expire
Because most FSAs reset, treat your remaining balance like a mini budget with a hard deadline.
-
Prioritize health services first. Appointments and procedures you’ve delayed—especially if your deductible is met—can generate the best financial return.
-
Use eligible retail purchases to zero out the balance. Approved items can bridge any leftover dollars you can’t reasonably spend on appointments.
-
Create a documentation folder. Save digital or paper receipts, EOBs (explanations of benefits), and doctor’s notes if required for certain items.
-
Understand your plan’s carryover policy. If your employer allows a rollover up to the IRS limit, you still don’t want to leave excess funds behind. Time purchases to finish near zero—without dropping below what you need for early-January expenses.
Smart HSA Strategies at Year-End
Even though HSAs don’t expire, you can still use December to tighten your approach.
-
Max out contributions if possible, especially if you expect higher medical costs or want to bolster tax-advantaged savings.
-
Invest HSA funds (if your provider allows) once you maintain a reasonable cash cushion for upcoming bills. Long-term investing can enhance the HSA’s role as a stealth retirement vehicle for future healthcare costs.
-
Pre-pay or reimburse yourself for qualified expenses incurred this year. With proper receipts, you can reimburse yourself at any time—another way to manage cash flow.
-
Coordinate with an FSA if you have one. Some employers offer a Limited-Purpose FSA (LPFSA) for dental/vision expenses alongside your HSA. Confirm which account should be used first to avoid claim denials.
Pay-Over-Time With FSA/HSA and Other Options
If you’ve postponed care due to cost, consider these year-end payment strategies:
-
Use FSA/HSA for copays, deductibles, and qualified services. This uses pre-tax dollars, lowering your real cost.
-
Split payments across accounts. For larger expenses, apply your FSA/HSA first and pay the remainder via standard payment methods.
-
Check for pay-over-time options. Many healthcare providers, pharmacies, and telehealth platforms integrate financing tools that can spread payments while still allowing you to use FSA/HSA funds for eligible portions.
-
Plan around payroll timing. If you contribute to an FSA or HSA via payroll deductions, map out remaining pay cycles to ensure you have funds available when you need them.
Eligible Expenses to Consider Before December 31
Always verify with your plan, but the following categories are frequently eligible:
-
Preventive care and checkups
-
Specialist visits (dermatology, allergy, orthopedics, PT/OT, behavioral health)
-
Vision (eye exams, prescription glasses, contact lenses, solution, lens cases)
-
Hearing (tests, hearing aids, batteries)
-
OTC medications (pain relievers, cold/flu, allergy, acid reducers)
-
First-aid and health supplies (bandages, thermometers, hot/cold packs, blood pressure monitors)
-
Women’s health products (menstrual care, pregnancy tests, prenatal vitamins if eligible)
-
Skin health (broad-spectrum sunscreen SPF 15+, sunscreen lip balm)
-
Orthopedic supports (braces, compression garments)
-
Medical travel/parking (in some plans with documentation)
Tip: Many retailers label products as FSA-eligible and some offer dedicated FSA/HSA stores. Keep an eye on shipping cutoffs if shopping late in the season.
Open Enrollment: Set Yourself Up for Success Next Year
While optimizing current benefits, use open enrollment to design a smarter plan for next year.
-
Estimate costs realistically. Factor in routine care, ongoing prescriptions, and any planned procedures.
-
Compare plan designs. Lower premiums often come with higher deductibles; evaluate total cost of care, not just the monthly premium.
-
Consider an HDHP + HSA if you’re eligible and can afford higher deductibles with the help of pre-tax savings.
-
Right-size your FSA election. Look at your actual spending this year to avoid overfunding. If your employer offers rollover, confirm the amount and plan accordingly.
Common Year-End Pitfalls (And How to Avoid Them)
-
Waiting too long to book. December appointment calendars fill quickly. Schedule early or be flexible with dates and times.
-
Assuming all expenses qualify. Check your plan’s eligible expense list and documentation requirements before you buy.
-
Forgetting dependent care deadlines. DCFSA rules are strict; confirm spend-by and claim-by dates.
-
Missing receipts. Keep digital copies of invoices, pharmacy slips, and EOBs. Many apps allow you to photograph and upload on the spot.
-
Confusing grace periods and rollovers. Ask HR or your plan administrator for written confirmation of your plan’s specific rules.
A Simple Action Plan for the Next 30 Days
-
Log in to your insurance and FSA/HSA portals.
-
Note balances, deductibles, and deadlines.
-
List health tasks you’ve postponed (screenings, follow-ups, therapies).
-
Book appointments and set calendar reminders for claims submission.
-
Make a small eligible purchase list to finish off FSA funds if needed.
-
Evaluate open enrollment choices and adjust contributions for next year.
-
Gather and store receipts in a single digital folder for easy claims.
Final Word: Turn Benefits Into Real-World Wellness
End-of-year benefits planning is more than a financial housekeeping task. It’s a chance to translate pre-tax savings and insurance coverage into tangible health outcomes—checking in with your body, reducing pain points, managing chronic conditions, and entering the new year with fewer surprises. Whether you’re using an FSA before it expires, maximizing HSA contributions, or simply confirming you’ve tapped the last dollar of your insurance benefits, a focused month of planning can create momentum that lasts well beyond January 1.
Take action today: review your accounts, schedule needed care, and make the most of your end-of-year benefits. Your future self—and your budget—will thank you.