In 2023, roughly half of the people holding a flexible spending account forfeited money to their employer. The average loss was $436. The year before it was $441. Those figures come from EBRI's database of more than three million real accounts, the only large-scale measurement anyone has made. Picture any other savings product where, in a normal year, half the savers end up poorer for using it.
That $436 is a car payment, surrendered for guessing wrong about your own body twelve months in advance. And the guessing is the product. An FSA asks you each fall to forecast next year's medical spending to the dollar, and use-it-or-lose-it is a forecasting game the player can only lose: overshoot and the cash is gone, undershoot and so is the tax break you enrolled for.
Here is the detail I keep coming back to. The forfeited money does not go to the government. It reverts to your employer. Money magazine, extrapolating from EBRI's rates, puts the national total near $4.5 billion a year. That number is an estimate, and it has to be, because no federal agency tracks the figure. The IRS counts every dollar that goes in. Nobody counts what never comes back out.