Short answer: You usually lose access to unused FSA funds when you leave your job, unless you elect COBRA for a healthcare FSA. Dependent care FSAs cannot be continued through COBRA.
What happens to a Flexible Spending Account (FSA) after employment ends depends on the type of FSA and whether continuation coverage is elected.
For a healthcare FSA, expenses are generally eligible for reimbursement only if they are incurred before your employment ends, unless you elect to continue the FSA through COBRA. If you choose COBRA continuation and your healthcare FSA has a positive balance, you may continue using the account for the remainder of the plan year by paying the required after-tax premiums. If you have already been reimbursed for more than you contributed at the time you leave employment, you typically are not required to repay the difference due to the Uniform Coverage Rule.
If you do not elect COBRA, any unused healthcare FSA funds are usually forfeited after your termination date, subject to the plan’s claims submission deadlines.
For a dependent care FSA, COBRA continuation is not available. After you leave your job, you may generally continue submitting claims only for dependent care expenses incurred while you were still employed and participating in the plan. Expenses incurred after your termination date are not eligible for reimbursement.
Because plan terms can vary, employees should review their FSA plan documents or separation materials to understand how termination affects their specific account. FSA continuation and termination rules are governed by federal tax and benefits guidance administered by the Internal Revenue Service.
Sources
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Internal Revenue Service, Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans: https://www.irs.gov/publications/p969
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Internal Revenue Code, Sections 125 and 4980B
Content history
Originally published: March 25, 2025
Last reviewed: January 25, 2026