re: Flexible Spending Accounts for medical costs - use it or lose it?

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The full yearly FSA money is available on day one. Therefore there is a risk to the company if you spend more FSA money than you contributed (and then leave the company). The forfeited money the company collects offsets the money they lose. Hope that make sense.

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This, the reason the FSA is use it or lose it every year is because it's a big risk on the balance sheet for every company. You can use 100% of the funds (which the company covers) from day 1 and then each paycheck they take back equally throughout the year. If you leave the company mid-year and used all your FSA money, the company gets a negative hit there. This is why if you dont use your funds all in the year the company keeps it to in theory offset people who make have left and used more than what was collected.

My company doesnt offer any FSAs for this reason, but does offer an HSA with the HDHP at least. The HSA money your company puts in is way less of a risk since they can do it as they wish rather than front a bunch of it from day 1.

Though I still wish we had a dependent care FSA so I could at least send $5k of my money tax-free to pay for daycare