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Woman shopping for sanitary pads in a pharmacy
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If you have a flexible spending account (FSA), expect to see a big change in 2023 that could help you save money on medical costs — provided you know how to make the most of it.

More than 30 million people are enrolled in employer-sponsored FSAs, to which employees contribute pre-tax dollars to pay for eligible healthcare costs, up to a maximum of $2,850 for 2022. The money in these accounts can be used to pay for a wide array of out-of-pocket health expenses, including copayments for doctor visits and prescriptions, over-the-counter medicines and medical devices. The amount you can contribute is determined by the IRS and is linked to inflation rates — which means the maximum is getting an unprecedented increase for 2023, rising to $3,050.

Experts generally recommend people take advantage of this benefit when possible, but FSAs do have a catch: Your contributions are use-it-or-lose-it, and that clause usually kicks in at the turn of the calendar year.

Employers can offer a grace period that gives you until March 15 to spend down the FSA or allow you to roll over some of the money into the new calendar year (but not both). And they’re not required to offer either one. The rollover maximum is determined by the IRS, and it’s indexed to inflation. That means the amount you can roll over next year (that is, from your 2023 balance into 2024) is going up to $610. This year, the maximum you can roll over is $570.

Where to spend down your FSA dollars