Question of the Week

Posted by BAS - 28 August, 2014

header-picture

Q.- An employee used her flexible spending account debit card at the dentist to pay for a teeth cleaning and a crown.  Now, she received notice that her debit card has been deactivated and she needs to provide information to justify the charge.  Why is this?

A.- The IRS requires all flexible spending account expenses to be substantiated, in order to confirm that they are eligible to be paid from a FSA.  Many expenses paid with an electronic debit card are automatically substantiated at the point of sale.  This would include established plan copayment amounts and other recurring charges that are noted in the FSA system.

Many expenses cannot be adequately substantiated at the point of sale.  This would occur, for example, when the card is used for dental, chiropractor or physician office visits where the charge is not equal to an established plan copayment amount.  A participant's swipe of the debit card pays the provider for the expense, but the expense is noted as needing additional documentation.  The IRS requires the participant to submit documentation (e.g., receipts that meet the substantiation requirements) to confirm that the expense was properly paid from the FSA.


Recent Posts

Question of the Week - Allergy Medicine

read more

New Guidance on Tracking Technologies and HIPAA

read more

Enhancing Benefits Administration Efficiency: MyEnroll360's New Hire Waiting Period Management

read more