HSA and FSA Year-End Deadlines for 2026

Health accounts offer some of the best tax breaks available, and each has year-end rules that can cost you money if you miss them. A health savings account (HSA) belongs to you, rolls over every year and can be funded until the tax filing deadline. A flexible spending account (FSA) belongs to your employer’s plan and may expire. This guide covers the 2026 limits, the deadlines and the traps. Figures come from IRS Revenue Procedures 2025-19 and 2026-24 and from IRS Publication 969. It is general information and does not replace advice from your plan administrator.

HSA basics

An HSA is available if you are covered by a high-deductible health plan (HDHP) and have no disqualifying other coverage, are not enrolled in Medicare and cannot be claimed as someone else’s dependent. For 2026, an HDHP has a minimum deductible of $1,700 for self-only coverage or $3,400 for family coverage, and an out-of-pocket maximum no higher than $8,500 or $17,000. Contributions are deductible (or excluded from pay if made through your employer), growth is tax-free and withdrawals for qualified medical expenses are tax-free. This triple tax advantage is unique.

HSA contribution limits

The limit includes contributions from your employer. If you and your spouse both have family coverage, you share one family limit, and each spouse who is 55 or older can add a $1,000 catch-up to their own account. Check the total with your payroll to avoid excess contributions, which are taxed at 6% each year until fixed.

The deadlines

• Contributions for 2026 can be made until the federal filing deadline in April 2027, excluding extensions. Tell your HSA custodian that a deposit is for 2026.
• Payroll contributions must come through pay dated 2026. If your plan lets you change elections mid-year, you can adjust for the last pay periods, but many employers only allow it during open enrollment or after a qualifying event.
• Spending has no deadline. HSA money rolls over indefinitely, and you can reimburse yourself years later for expenses paid out of pocket, if the expense was incurred after you set up the account and you kept receipts.

The last-month rule and its trap

Normally, your HSA contribution limit is prorated by the months you were eligible. Under the last-month rule, if you are eligible on December 1, you are treated as eligible for the whole year and can contribute the full annual amount. The catch: you must remain eligible during a testing period that runs through December 31 of the next year. If you fall out of eligibility, say by enrolling in non-HDHP coverage in 2027, the extra contribution becomes taxable income and is subject to a 10% additional tax. This matters to people who switch to an HDHP for 2026 open enrollment, switch back after a year or start Medicare. Medicare enrollment ends your HSA eligibility; premiums, deductibles and many others can still be paid from the account.

What HSA money can buy

Qualified expenses include deductibles, copays, prescriptions, dental and vision care, and many over-the-counter items. Eligible expenses are defined in IRS Publication 502 and listed in Publication 969. Non-qualified withdrawals are taxed as income and carry a 20% penalty before age 65; after 65 the penalty goes away but the tax remains. A few changes in recent law are worth knowing: bronze and catastrophic plans sold through the ACA Marketplace are treated as HDHPs starting in 2026, and certain direct primary care arrangements no longer disqualify an HSA, within dollar limits. Confirm details with your plan.

Health FSA basics

A health FSA is funded through payroll deductions before tax. The 2026 limit on employee salary reductions is $3,400. A key feature is that the full annual election is available on day one, but unspent money may be forfeited at the end of the plan year. Employers may offer either a carryover (up to $680 into 2027) or a grace period of up to two and a half months, but not both, or neither. The plan can also set a “run-out” period for submitting claims for expenses incurred during the year. Check your plan documents for the exact date. Many calendar-year plans end December 31, with claims accepted until March.

Things to do before the year ends

1. Log into your FSA portal and check your balance and your plan’s rules for carryover or grace period.
2. Schedule appointments, dental work and eye exams you need anyway.
3. Stock up on eligible items such as prescriptions, contact lens solution, first aid supplies, sunscreen, or over-the-counter medicine. The CARES Act made over-the-counter products eligible without a prescription.
4. Submit receipts and claims early to leave time for fixes.
5. Decide on your 2027 elections during open enrollment. Estimate costs conservatively, because losing FSA money is a worse outcome than missing out on some tax savings.

Other accounts

Limited-purpose FSA: If you have an HSA, you cannot also have a general-purpose health FSA, but you can have a limited-purpose FSA covering dental and vision. Dependent care FSA: This covers childcare so that you can work. For 2026 the annual limit rose to $7,500 per household ($3,750 if married filing separately) under the 2025 tax act, up from $5,000, and the money is usually subject to a use-it-or-lose-it rule with a grace period. Health reimbursement arrangements (HRAs): funded by the employer, with rules set by the plan.

Using an HSA as an investment account

If you can pay medical bills from other money and your HSA has a balance above a threshold, many providers let you invest the rest. Keep receipts for expenses you pay yourself, and you can reimburse yourself tax-free later. The strategy works best when you can afford to leave the money invested for years. It is not right for everyone: if you have a high-deductible plan because you could not afford a better one, the account is probably needed for current care.

Mistakes to avoid

• Contributing above the limit when two employers or two spouses contribute.
• Paying for non-qualified items and later receiving a surprise tax bill.
• Forgetting that FSA contributions reduce wages and might affect other benefits such as Social Security calculations marginally.
• Missing the claim deadline because the grace period applies to spending, not to filing.
• Enrolling in Medicare Part A when you turn 65 without checking that it can be retroactive up to six months, which affects HSA contributions.