FAQs about Debit Cards
Debit Cards are the newest convenience in Flexible Spending Accounts and HRA’s. Debit Cards look like a typical Mastercard credit card, but, in fact, they are stored value cards. When employees elect to participate in a FSA or an HRA, the value of their accounts is credited to the debit card. As the participant incurs eligible expenses, payments for those services are deducted directly from their FSA or HRA account each time the card is swiped. In effect, the participant no longer has to pay for the eligible expense with money from their own pocket. The Debit Card is an option for your Employer to offer as a part of their Plan. Not all Employers will choose to offer the card. Employers that do offer the card may choose to pass on the expense of the card to the participant.
You may receive 2 debit cards issued in the name of the participant. Each card will have a different number for tracking purposes, so feel free to keep one as a back-up or you may let a spouse or dependent use one for their eligible expenses. Both cards will debit directly from your account and are able to be reloaded each year that you remain active in the plan. Debit cards are good for 3 years, so be sure to check your expiration date on the front of the card.
The IRS requires claim substantiation on all FSA and HRA expenses. However, if the swipe amount is equal to your Employer’s single co-pay or up to a multiple of 5 times a co-pay for services rendered, there is no need to submit a paper claim following the swipe. The IRS has issued guidance that allows for the match up of such expenses as sufficient substantiation. For all other expenses (deductibles, co-insurance, discount vision plans, over the counter items etc), you will receive a Receipt Notification from Taxsaver Plan requesting the receipt to substantiate the expense. Many stores and pharmacies have implemented a system referred to as IIAS (Inventory Information Approval System). When the FSA Debit Card is used at a store that has implemented IIAS, eligible FSA prescription and Over-the-Counter items are identified at the point-of-sale as eligible and receipt substantiation will not be required. If you have attempted to purchase an item the IRS deems as ineligible OR an item the IRS deems as Dual Purpose, an additional form of payment will be requested at the register. You may still submit this expense for reimbursement by completing a claim form (available online). If the expense is considered eligible under the Plan, a reimbursement will be processed and sent to you. A receipt is not the credit card proof of payment receipt, but an itemized statement from the provider that includes the date of service and type of service rendered, or date of service and name of the prescription or over-the-counter items purchased. You will receive a series of Receipt Notifications requesting the receipt. If you do not respond to the requests, your card will be temporarily deactivated until the swipe has been properly adjudicated. Generally, you are given 35 days to submit the receipt requested.
Once you submit the receipt and it is approved, you will receive an Approval Notification and your swipe amount will be labeled “complete” when viewed on our website. It is possible that if you are using your FSA Debit Card and submitting expenses that you have paid for out of pocket at the same time, the expenses that you submit for reimbursement will be held in your account until your debit card receipt is submitted. This will also generate an Approval Notification but the swipe amount will show “pending” on our website. As soon as you send in the receipt for the FSA Debit Card swipe, the receipts that you submitted for reimbursement will be sent to you on your Employer’s next scheduled reimbursement day. If you do not have the requested FSA Debit Card receipt or the expense that you paid for with your FSA Debit Card is not eligible under the Plan, the non-debit card expense will be used to adjudicate and keep the card active. You may also send in a check made payable to your Employer to adjudicate a FSA Debit Card expense when your receipt is lost or the expense is not eligible under the Plan.
Debit cards can only be used at providers with certain eligible merchant codes. You may use a provider that is eligible under the Plan, but the merchant code assigned to that provider is not an eligible merchant code. In this circumstance, you will need to pay for the expense out of pocket and submit the receipt for reimbursement. Non-approved merchant codes will block you from improper use of the card. Should an ineligible expense slip through at the point of swipe, the ineligible expense will be reported to Taxsaver Plan within 24 hours of the swipe, and you will be sent a request to reimburse the Plan for the ineligible expense. It is also possible that the provider will be assigned an eligible merchant code, but the merchant code may not match to the provider co-pay under the health plan. For instance, you will visit the doctor and pay your co-pay, but when the swipe comes through the system, your doctor’s merchant code will be a hospital merchant code, not one assigned to a doctor’s office. In this circumstance, your card will be accepted but you will be requested to submit a receipt for the expense even though the co-pay amount matches the health plan.
Taxsaver Plan realizes that not all providers accept credit cards. If you use a provider that does not accept credit cards, you will be able to submit your claims and then a check or direct deposit will be issued to you. The amount of the check or direct deposit will be deducted from the balance in your account, making sure that you are not reimbursed for more than you have elected in your FSA or have contributed to you in your HRA.
At midnight on the last day of the Plan Year, the card will be turned off for FSA accounts. Any claims directly submitted during the runoff period will be reimbursed by a check or direct deposit. For HRA account accounts, your card will remain active from Plan Year to Plan Year, as long as you have a balance to carry forward. As long as you re-elect a FSA for the new plan year, the card will be activated with your new election as soon as your first deduction for the new Plan Year is taken. If you do not elect a FSA in the new Plan Year, then the card will stay inactive.
If you terminate during the Plan Year, the card will be turned off as soon as your termination is reported to Taxsaver Plan. Therefore, any expenses incurred that had not been reimbursed with a swipe would need to be submitted for reimbursement with a check or direct deposit.
After your Employer’s run-out period has ended, a report will be released that identifies those participants with remaining un-substantiated FSA Debit Card transactions from the prior year. Under IRS regulations, your Employer is required to take action on the un-substantiated amounts. You can expect to be contacted by your Employer, or Ex-Employer if you have been terminated during the year in regards to these amounts. We STRONGLY suggest that you keep your account in good standing to avoid a 1099 or other form of action.