Attention FSA Participants!
September 9, 2009
If you have used your Bank of America Health FSA debit card, you may be required to submit your receipts or other documentation that substantiates your transaction as a qualified expense under the IRS regulations.
Is Your FSA Debit Card Not Working?
If your debit card does not work at the point of purchase, it may be due to one or more of the following reasons:
- You may have previous FSA debit card purchases that require substantiation.
- The merchant may not be in compliance with the IRS requirement for implementing an Inventory Information Approval System (IIAS) and cannot accept your debit card for payment.
- You do not have sufficient funds in your FSA to cover the expense.
What is Substantiation?
Substantiation is the process of providing proof or documentation that an FSA claim is for an IRS-qualified health care expense. Types of documents you may submit to Bank of America include:
- Receipts from your health care provider or merchant
- Explanation of Benefits (EOBs)
- Bills or statements from your health care provider
FSA Substantiation
If you use your debit card to pay for eligible expenses but you do not substantiate these claims when requested to do so with Bank of America within the 120 day requirement, your debit card may be suspended and will be declined at the point of purchase. If you have a Limited Purpose FSA and an HSA, and you have failed to substantiate any FSA purchases within the 120 day requirement, your card may be suspended and you will not be able to access your FSA or HSA funds with your card.
Should your card be declined at the point of purchase for any reason, pay by another means and then enter a new claim for reimbursement from your FSA by signing in to your account online at Bank of America or by calling Customer Care at 1-866-791-0250.
How to tell if a transaction requires substantiation?
IRS Inventory Information Approval System (IIAS) and Health Care Debit Cards
As of Jan. 1, 2008, the IRS now requires merchants who sell qualified medical goods and services to have an Inventory Information Approval System (IIAS) in place to accept FSA and HRA debit cards. The inventory system categorizes each item sold in the merchant’s location as a qualified or non-qualified expense and allows the purchase to be automatically substantiated per the IRS requirements. Health care card processors, such as Bank of America, are required to decline any transactions at the point of service that are not for IRS-qualified expenses.
Effective July 1, 2009, the IRS added drug stores and pharmacies to the list of merchants that need to have the IIAS compliant systems in place in order to accept FSA and HRA debit cards. However, the IRS has made an exception allowing certain drug stores and pharmacies with at least 90 percent annual sales from qualified health care items to apply as a trusted merchant, enabling them to accept FSA and HRA debit cards. More than 50,000 pharmacies and drug stores have filed for the 90 percent exemption and are compliant with the IRS trusted merchant guidelines so they can accept these cards. Your debit card may be used at such merchants, but please note that you will be required to substantiate all of these purchases since trusted merchants do not have the systems in place to automatically substantiate the expense item(s). Merchants can become a trusted merchant by applying online at http://www.sig-is.org/en/index.asp.
Debit Card Denial Due to Insufficient Funds
Your debit card will be denied if your eligible expenses exceed your account balance. You may use your debit card up to the exact dollar amount within your account and pay for the remaining expenses out of pocket. For example, your account balance is $100.05, but your doctor bill is $150.00. In this case, you can still use your card for the $100.05, and you would have to pay the remaining $49.95 with another form of payment.
