An FSA cannot pay for expenses from a previous year. Eligibility turns on the date you received the service, not the date you were billed or the date you paid, so a doctor’s visit in December 2025 has to come from your 2025 balance and cannot be reimbursed from your 2026 account even if the invoice arrives months later. A few plan features — run-out periods, grace periods, and carryovers — bend the timing at the edge of a plan year, but none of them reach back into an earlier year.
Why the Date of Service Controls
Every FSA claim rises or falls on one date: the day you actually received the medical care or dependent care. The IRS treats an expense as “incurred” when the service is provided, not when you get the bill, submit the claim, or make a payment.1Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
That single rule answers most prior-year questions. A procedure performed on December 28 belongs to the plan year that includes December 28. If your new plan year starts January 1, your fresh FSA dollars cannot touch that expense. It works the other way too: a service received on January 3 is a new-year expense, even if you have leftover funds from the prior year you were hoping to spend down. Whichever plan year the service falls within is the pot of money that has to pay for it.
This is where people lose money on late-arriving bills. You get a February statement for lab work done in November, assume your current FSA covers it, submit the claim, and see it denied because the date of service predates your current coverage period. Before filing any claim, look at the date of service on the itemized statement or Explanation of Benefits, not the date printed on the bill.
The Run-Out Period Buys Filing Time, Not Coverage
The run-out period is the reason people think prior-year expenses might still be reimbursable. It’s a paperwork deadline, not an extension of coverage. After your plan year ends, most employers give you a window to submit claims for services you already received during that plan year. Run-out periods commonly last around 90 days.1Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans For a plan year ending December 31, you might have until late March to file — but only for services with a date on or before December 31.
The run-out period does not let you incur new expenses against the old year, and it does nothing for services from years further back. Once the run-out window closes, the plan administrator will deny any claim submitted after the deadline, and any money remaining in the account is forfeited. If you had appointments in the final months of the plan year, pull together your receipts and EOBs early rather than waiting on the deadline.
Grace Periods: The One Way Last Year’s Dollars Pay for New Services
A grace period is the closest thing to using an FSA “backward.” It gives you up to two and a half extra months after the plan year ends to incur new eligible expenses using leftover funds from the prior year.1Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans For a calendar-year plan ending December 31, this stretches your spending window through March 15 of the following year. Unlike the run-out period, the grace period actually lets you receive new services during those weeks and pay for them out of last year’s balance.
Read that carefully, because it’s not what most people asking about “previous year expenses” want. The grace period lets you spend old money on new services. It does not let new money pay for old services. A service you received in November 2024 cannot be reimbursed by a grace period that runs from January through March 2026. Nothing about the grace period reaches back into a prior plan year for care that already happened.
Carryovers Move Money Forward, Not Backward
The other softening of the use-it-or-lose-it rule is the carryover, which lets a set amount of unspent funds roll into the next plan year. For the 2026 plan year, the maximum carryover is $680.2FSAFEDS. FSAFEDS Message Board – 2026 Benefit Period Your employer can set a lower limit but not a higher one. Carried-over dollars simply add to your new plan year’s balance and can be used for any eligible expense incurred during that new year. The carryover does not reduce how much you can elect for the new year.1Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
The direction matters. A carryover moves last year’s money into this year, where it can pay for this year’s services. It does not create any mechanism for this year’s money to reimburse last year’s services. Federal rules also prohibit offering both a carryover and a grace period on the same health FSA, so your plan will have one, the other, or neither.3Internal Revenue Service. Notice 2020-33 – Section 125 Cafeteria Plans Modification of Permissive Carryover Rule Check your plan documents or ask your benefits administrator which one applies to you.
Any unused balance above the $680 carryover ceiling is forfeited. So even with a carryover, the general answer to “can I reimburse a prior-year expense” stays no.
Orthodontia Is a Real Exception
Orthodontia is one of the few areas where the strict date-of-service rule bends, and it’s worth knowing if a large prepaid orthodontia bill is behind your question. Because braces involve a single upfront payment covering treatment that spans months or years, many FSA plans reimburse orthodontia based on the payment date rather than the dates of individual adjustment visits. The federal employee FSA program, for example, allows reimbursement for prepaid orthodontia during the benefit period when the payment was made, regardless of when future services occur.4FSAFEDS. FSAFEDS Orthodontia Quick Reference Guide
Not every plan handles orthodontia the same way. Some require you to submit claims as each monthly payment comes due; others reimburse a lump sum upfront. Before making a large orthodontia payment, confirm your plan’s specific policy, because it affects which plan year’s funds apply.
What to Do With Prior-Year Bills That Arrive Late
If a bill for a service you received last year lands in your mailbox this year, the question is not whether your current FSA can pay it. It can’t. The question is whether last year’s FSA still can. Two conditions have to be true:
- The date of service falls within last year’s plan year.
- You’re still within last year’s run-out window when you file the claim.
If both are true, submit the claim against last year’s account with an itemized statement or EOB showing the service description, the date of service, and the amount charged. If the run-out window has already closed, the funds in that prior-year account are gone regardless of when the bill actually arrived. This is why late-year appointments deserve a calendar reminder: track your run-out deadline the moment the plan year ends, not when the bill shows up.
Where Forfeited Money Goes
If your prior-year expense can’t be reimbursed and the balance is forfeited, the money does not simply vanish. Forfeited amounts return to the employer’s plan. If the plan is governed by ERISA, which covers most private-sector employers, forfeited funds are considered plan assets and have to be used for the benefit of participants — reducing future employee contributions on a uniform basis, offsetting plan administration costs, or increasing coverage for the following year.5Internal Revenue Service. Notice 2013-71 – Modification of Use-or-Lose Rule For Health Flexible Spending Arrangements The employer cannot hand forfeited money back to the specific people who forfeited it, because that would effectively cancel the use-it-or-lose-it rule.
The practical takeaway is planning-side, not recovery-side. There’s no appeal that turns a prior-year expense into a current-year reimbursement. The way to avoid the loss is to know your plan’s run-out deadline, know whether you have a grace period or a carryover, and file claims for late-arriving bills against the correct year’s account before that year’s window shuts.