FSA Use-It-or-Lose-It Risk Calculator
Example: FSA contribution election (max $3,300 in 2025): 2000 $ · Expected qualified medical expenses this year: 1500 $ · Federal marginal tax rate: 22 % · State income tax rate: 5 %
| Tax saved on your FSA contribution | $540 |
| Amount at risk of forfeiture | $500 |
| Net benefit if fully used | $540 |
| Minimum spending to break even vs not contributing | $1,460 |
Worked example
Contributing $2,000 to an FSA at a 22% federal + 5% state rate saves $540 in taxes. If you only spend $1,500, you forfeit $500. But the tax savings ($540) more than cover the forfeiture loss — you are still ahead by $40. The break-even spending is about $1,460: spend at least that much and your FSA is worth it regardless. Spend less, and you have effectively paid the IRS to hold your money.
Frequently asked questions
Does the FSA grace period or rollover apply?
Many employers offer either a 2.5-month grace period (use FSA funds through March 15 of the next year) or a rollover of up to $660 (2025 IRS limit). Your employer chooses one or the other — check your plan documents. This calculator models a strict use-it-or-lose-it deadline; adjust your expected expenses if you have a grace period.
What counts as a qualified FSA expense?
Qualified expenses include copays, prescriptions, dental care, vision, and most out-of-pocket medical costs. Over-the-counter medications and menstrual products are now FSA-eligible (CARES Act 2020). Cosmetic procedures and gym memberships are not. IRS Publication 502 has the complete list.
Can I change my FSA contribution mid-year?
Generally, no — FSA elections are locked for the plan year unless you experience a qualifying life event (job change, marriage, divorce, birth/adoption of a child). Plan your contribution conservatively if your medical needs are unpredictable.