A Medical Flexible Spending Account (MedFSA) allows you to set aside pre-tax dollars to pay for qualified medical, dental, and vision expenses. The maximum contribution limit for 2026 is $3,400.
Unlike HSAs, FSAs are governed by strict forfeiture regulations. Unused funds at the end of the plan year are forfeited to the employer, subject to two potential relief provisions: a 2.5-month grace period or a rollover provision capped at $680 in 2026. You cannot utilize a MedFSA if you contribute to an HSA, as it constitutes disqualifying non-HDHP coverage. Refer to IRS Pub. 969, “Health Savings Accounts and Other Tax-Favored Health Plans” for coordination guidelines.
Under federal regulations, a MedFSA is subject to the Uniform Coverage Rule. The entire annual election amount must be available to you on day one of the plan year, regardless of how much has been withheld from your paychecks. If you elect $3,400, you can spend the entire $3,400 in January and resign in February. The employer is legally prohibited from clawing back the remaining balance or withholding it from your final paycheck, representing a rare statutory arbitrage.