- Immediate access to your FSA account - you avoid paying with cash or check
- Reduction in currently required paperwork - you avoid filling out a claim form
- Immediate payment of the expense - you avoid waiting for a reimbursement check as funds are transferred immediately from your FSA at the time you incur the expense
The reduced burden and ease of use at the point of sale has proven to be extremely convenient for plan participants
How does the Debit Card work?
The Debit Card is accepted only at certain merchants and cannot be used at non-healthcare locations such as gas stations and restaurants. Qualified merchants include physician offices, hospitals, dental offices, pharmacies (including mail order), hearing/vision care provides, etc. As you incur qualified health care expenses, you present your card for payment. The amount of the qualified expense will be deducted automatically from your FSA, and the pre-tax dollars will be electronically transferred to the provider/merchant for immediate payment. The card system will validate your coverage, the active status of your card, the merchant category code and the available funds in your account. As you may be required to substantiate transactions, you should retain itemized documentation for all card transactions. For example, itemized receipts listing the merchant name, name of the item/product, date and amount will be requested for all over-the-counter purchases.
You should use the card for qualified expenses only. View an extensive list of Eligible expenses. The card is extremely effective when used to pay for prescription drug or office visit co-pays. If you purchase a prescription drug along with ineligible items, ask the merchant to ring up the prescription separately from the non-qualified items. You can use the card for other health expenses, including medical, dental, vision and hearing. Each year when you re-enroll, the card will reflect the current plan year's election amount(s).
Is this process paperless?
No. Although you do not have to complete a claim form, additional documentation is required in some cases in order to meet IRS guidelines. Therefore, you should keep copies of all receipts and itemized statements (not the credit card receipt) for each purchase for the entire plan year. In some cases, you'll receive a letter requesting the documentation. Upon receipt of the letter, you are required to submit appropriate documentation to substantiate the expense.
What type of additional documentation is required?
The required documentation is the same information required for traditional paper claims. You should retain copies of all itemized receipts for each card transaction. Appropriate documentation must be provided to the administrator upon request. Appropriate documentation includes your insurance plan's Explanation of Benefit (EOB) statement or an itemized receipt or bill from the provider including the patient's name, a description of the service, the original date of service and your portion of the charge. An itemized cash register receipt with the merchant name, name of the item/product, date and amount is acceptable for a limited number of qualified expenses to include over-the-counter medications, hearing aid batteries and contact lens solutions. For prescription drugs,, please submit a pharmacy statement or a printout from your pharmacy including the patient's name, the prescribing physician, the RX number, and the name of the drug, the date the RX was filled and the co-payment amount. Credit card receipts, cancelled check and balance forward statements most often do not meet the requirements for acceptable documentation. We recommend you keep all documentation in a separate envelope at home or work for the entire plan year.
Will I get a request for documentation for every card transaction?
No. In many cases, the transaction will be substantiated automatically by the card system using one of the IRS-approved methods outlined below. If the card system is unable to automatically substantiate a transaction, you will receive a request for documentation.
In 2003, the IRS issued guidance approving the use of debit and credit cards for Health FSAs. The guidance outlined acceptable claims substantiation requirements and ruled a "sampling" approach is not permitted. All charges not automatically substantiated (using one of the methods below) are treated as conditional charges pending after-the-fact confirmation the charge was a permissible one. You may review this 2003 IRS guidance in Rev. Ruling 2003-43.
The guidance includes three categories of expenses that can be treated as automatically substantiated without a receipt or further review: (1) transactions that equaled the exact dollar amount of the co-payment for the service under the participant's major medical plan (e.g., $15); (2) recurring expenses that matched previously-approved expenses (e.g., a prescription that is regularly refilled by the same provider for the same charge); and (3) charges that were substantiated in "real time" (i.e., at the time and point of sale) with information from the merchant, service provider, or an independent third party (e.g., a pharmacy benefit manager) verifying the charge was for a qualified medical expense.
What should I do if I want to pay for multiple co-payments in one transaction?
The IRS does not permit automatic substantiation for multiples of co-payment amounts. For example, three prescriptions at a $15 co-payment amount would result in a $45 transaction that would not be substantiated automatically. In this case, you should effect a separate transaction for each co-payment amount to ensure automatic substantiation and to avoid the need to provide documentation. To sum up, the simple paperless solution for three co-payments is: "swipe, swipe, swipe."
What happens if I forget to reply to the letter requesting additional documentation?
If the request for additional information is ignored, a second letter is generated giving you additional time to respond. If there is no reply to the second request, collection procedures will begin. The card will be deactivated and you will be required to make reimbursement to the plan by personal check.
What happens if I accidentally use the card for ineligible or non-qualifying expenses?
Before using the card, you should become familiar with the list of Eligible Expenses. Be sure to ask merchants to ring up your qualified expenses separately from your other personal items. If the card is misused, you will be required to write a personal check back to the plan. If you do not reimburse the plan accordingly, the card will be deactivated and collection procedures will begin. In addition, your employer will be contacted.
Can I use the card to purchase qualified over-the-counter medications?
In 2003, the IRS issued a Revenue Ruling approving reimbursement of qualified over-the-counter (OTC) medications under healthcare FSAs. If you use your card to purchase qualified OTC medications, you will be required to submit itemized receipts. Once again, you should save all itemized receipts for purchases made with your debit card. We suggest that you pay for eligible OTC items separately from prescription(s). You may either charge OTC items to your debit card or save your OTC receipts and submit a manual claim. Please note: OTC medications must be for "medical care" as defined by the Internal Revenue Code. An over-the-counter medication is for "medical care" if it is needed to treat a medical condition and is generally accepted as falling within the category of "medicine or drugs". Items that are merely beneficial to the general health of an individual are not for "medical care" and are not reimbursable (e.g. vitamins, nutritional supplements). View a list of eligible over-the-counter medications.
What if I don't have a copy of my itemized receipt?
If you do not have a copy of your itemized receipt and receive a request for documentation, request a copy from the provider (pharmacy, doctor, or dentist). Additionally, many health insurance providers offer statements on their websites. It is important for you to retain your receipts for OTC purchases, as most often cash register receipts cannot be reproduced.
Are there any limitations on the usage of the card?
Aside from the specific merchant codes and the plan year election amount, there are no limitations. There are no transaction fees, and you have unlimited use of the card. Remember, though, you must use the card for qualified medical expenses only!
Will I receive a cardholder agreement?
Yes, you will receive a cardholder agreement when you receive your card. Please carefully read the cardholder agreement and the back of your card. By signing the back of your card, you agree to abide by the terms and conditions of the cardholder agreement. You further certify you will use the card for qualified medical expenses only and will not seek reimbursement under any other health plan. Each time you use s the card, you reaffirm your agreement to abide by the provisions of the cardholder agreement.
Must I use the card for all expenses I incur?
No. During the plan year, you can file traditional paper claims or use the card. If you choose not to use the card , we recommend you keep the card in a safe and secure place in case you want to use it in future plan years.
Will I receive a statement or an accounting of my Debit Card transactions?
You can view detailed account information including card payments on the participant page of the CONEXIS site.
What is the cost of the Debit Card and how do I request one?
Provided your employer plan includes the debit card option, you automatically will receive a card when you enroll in the plan. Please be sure to ask your employer's HR/Benefits Department if any associated card costs will be passed on to you.
What happens if I have a $1,000 limit on my Debit Card, but I have a $1,500 transaction?
The MasterCard authorization process does not allow for partial approval of transactions (e.g. a $90 expense against a $50 account balance cannot be partially approved for $50 and rejected for the remaining $40). Therefore, transactions exceeding your card limit or available balance will be rejected. For this reason, you should check your available balance on the website as you use the card throughout the year. If you know your available account balance, you can ask the merchant to charge up to the available balance on the card and use an alternative form of payment for the difference.
What should I do if my card is declined?
You may pay out of pocket and submit a manual claim. There are several reasons your card may be declined including insufficient account balance or ineligible merchant type. You may contact CONEXIS at
(866) 279-8385
to verify the reason your card was declined.
If I terminate employment, can I continue to use the Debit Card?
No. The card is inactivated upon termination of your employment. If you have qualified expenses to submit after your termination of employment, you can use the traditional method of filing a claim form with appropriate documentation. Claim forms are available here. Remember, though, your qualifying expenses must be incurred during your period of coverage.
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