The Forfeit Line

Every January, somewhere in America, an HR team quietly books a little revenue.

It doesn't show up on any sales report. Nobody rings a bell. It's the money employees put into their flexible spending accounts the year before and never spent. Under the use-it-or-lose-it rule, most of it goes back to the employer.

How much? The Employee Benefit Research Institute found that roughly half of all FSA accounts forfeited money in 2022, with an average loss of 441 dollars. An earlier analysis by Money estimated workers left about 4.2 billion dollars on the table in a single year.

Call it what it is: a pay cut people voluntarily give themselves, every year, because nobody reminded them that the clock was running.

Well. Consider yourself reminded.

There are ten weeks left in the 2026 plan year for most people. And FSAs are only the most famous leak. Dependent care accounts, insurance deductibles, dental maximums, education money, wellness incentives, and in some places your vacation days all run on the same calendar. They all reset on January 1. And in every case, the reset favors the company, not you.

This week's Playbook is the year-end harvest. One evening of work, a few phone calls, and a stack of money you already earned stops going back where it came from.

Before you spend a dime, figure out which rules you're playing by. Health FSAs come in three flavors, and your employer picked one.

Strict use-it-or-lose-it. Expenses must be incurred by December 31. Whatever's left disappears.

Carryover. Your plan lets you roll a limited amount into next year. For 2026 balances, the max carryover is 680 dollars. Anything above that is forfeited.

Grace period. Your plan gives you up to two and a half extra months, usually through March 15, to incur new expenses against this year's money.

Plans can offer a carryover or a grace period, not both. And neither one is the same as the claims deadline, sometimes called the run-out period. That's the date by which you have to submit receipts for expenses you already incurred. It's often March 31 or later, and people confuse it with the spending deadline all the time.

Here's the difference in plain English. The spending deadline is when the doctor visit has to happen. The run-out deadline is when the paperwork has to be in. Miss either and the money's gone.

Where to find all of this: your plan's summary plan description or the FSA administrator's website, usually under "plan rules" or "plan year details." It takes five minutes. Do it first, because every other move depends on it.

For quick reference:

Six moves. Do them in this order.

Log in to your FSA administrator's portal and write down three numbers: your annual election, what you've spent, and what's left.

Then adjust for timing. Your employer front-loads health FSA money, meaning the whole annual election was available to you on January 1 even though it comes out of your paycheck evenly. So the balance in the portal is the real number you need to spend. It's not "what's been deducted so far."

For dependent care accounts, it's the opposite. You can generally only be reimbursed up to what's actually been contributed so far. So the balance that matters is what will be in there by your final paycheck of the year.

Now do the math. If you have 1,900 dollars left in a health FSA with a 680-dollar carryover, you have 1,220 dollars that will vanish on December 31 unless you use it. That's your target.

This is the move that matters most, and it's time sensitive for a reason nobody mentions: appointments book out. Try getting a dermatologist, an optometrist, or a dentist in the third week of December. Everybody else with an FSA balance had the same idea.

Book now. Things worth checking on:

This one's not even about the FSA. It's about your health insurance.

Most plans run on a calendar year. If you've already hit your deductible for 2026, or you're close to your out-of-pocket maximum, then care you get before December 31 is significantly cheaper than the same care on January 2, when everything resets to zero.

Log in to your insurer's site and look for the deductible and out-of-pocket tracker. If you've had a big medical year, a surgery, a new baby, an ER visit, a lot of PT, you may be at or near the max. In that case, a procedure you were going to schedule in February might cost you a fraction as much if you can get it done in December.

Same logic for dental. Most dental plans have an annual maximum, often somewhere between 1,000 and 2,000 dollars, that resets on January 1. If you need a lot of work, your dentist can often split treatment across two plan years so you get two years' worth of coverage instead of blowing through one. Ask them. They do it all the time.

Once the appointments are booked, you may still have some balance. This is where people panic and buy forty boxes of bandages on December 30.

Don't do that. Spend it on things you were going to buy anyway. Since 2020, over-the-counter medicine and menstrual products have been FSA-eligible without a prescription. Beyond that, eligible stuff includes:

The big retailers have dedicated FSA stores now, and they're very good at highlighting expensive items to help you burn a balance. That's their quota, not yours. A year's supply of things you already use beats a gadget you'll never open.

Dependent care FSAs are the most forfeited accounts I see, because people forget they're reimbursement accounts. You pay the daycare, then you file a claim to get your own money back. If you don't file, you don't get paid.

Things that typically qualify for a child under 13 while you work: daycare, preschool, before- and after-school care, and day camps. Overnight camp doesn't count. Neither does kindergarten tuition in most cases.

Pull every receipt from your provider for 2026 and file anything you haven't claimed. If your provider doesn't give you itemized receipts, ask for a year-end statement with their tax ID. And note: dependent care accounts generally don't have a carryover option, though some plans offer a grace period. Check yours.

Also, if you elected more than you'll spend for the year, you usually can't just change it mid-year. You can change elections when you have a qualifying life event, like a change in your daycare provider's cost or a new child. If something changed this year, call HR and ask.

FSAs get the headlines, but plenty of other employer money expires on December 31. Open your benefits portal and look for:

If you have a health savings account instead of an FSA, flip the whole strategy on its head.

Your HSA never expires. It invests. It follows you from job to job. So for HSA owners, the year-end move is usually to fund it, not spend it. You have until April 15, 2027 to contribute for 2026, up to 4,400 dollars for self-only coverage or 8,750 for family coverage, plus 1,000 if you're 55 or older.

And if you can afford to pay medical bills out of pocket, keep every receipt. You can reimburse yourself from the HSA years later, tax free, as long as the expense happened after the account was opened. A shoebox of 2026 receipts can become a tax-free withdrawal in 2040.

The forfeit problem isn't a knowledge problem. It's a calendar problem. Everybody knows FSAs expire. Nobody remembers in September.

Here's the setup I'd build in Make.com. A scenario watches your inbox for messages from your FSA administrator, your insurer, and your benefits portal, plus subject lines with words like "balance," "deadline," "claim," "reimbursement," and "plan year." Each one gets logged to a Google Sheet. Then on September 1 and November 1 every year, the scenario sends you a summary: what you elected, what's left, and how many days you have. Takes about 40 minutes to build, and it runs forever.

For the rules themselves, don't try to read a 60-page summary plan description cover to cover. Upload it to Galaxy.ai and ask it to pull out four things: the spending deadline, whether there's a carryover or grace period, the claims deadline, and any wellness incentive deadlines. Then confirm the important ones on your administrator's site or with HR. AI is excellent at finding the needle. It's not your plan administrator.

Open enrollment is happening right now for a lot of companies, so use what you just learned.

Your 2026 leftover is the best data point you'll ever get for your 2027 election. If you forfeited money, elect less. If you ran dry in August, elect more. Look at your actual receipts, not your good intentions.

A forfeit account is a bet the plan designers make on human nature. They're betting you'll set it in January and forget it by October. Most of the time, they win.

Nobody's twirling a mustache here. The system is simply built that way. The rules reward people who look at the calendar, and they quietly collect from people who don't.

Spend one evening this week. Find the balance. Book the appointments. File the claims. That money was yours before it was ever theirs.

Want the whole harvest in one place?

I built The Forfeit Line Kit so you can run this in a single sitting. It includes a balance and deadline worksheet for every account type (health FSA, dependent care, commuter, lifestyle, education), a plan rules decoder with the exact questions to ask HR, a deductible and out-of-pocket calculator that shows whether to schedule care in December or January, an FSA-eligible shopping list organized by price, the dependent care claim checklist, my Galaxy.ai prompt for pulling deadlines out of a plan document, the Make.com reminder blueprint, and a one-page 2027 election calculator built from your actual 2026 spending.

Reply to this email with the word FORFEIT and I'll send it over.

See you Friday.

Alex Rivera, Wealth Architect at Wealth Grid

This is education, not financial, tax, or medical advice. FSA and benefit rules vary by employer and plan, so confirm your specific deadlines and eligible expenses with your plan administrator or HR before you spend.