FSA cards are pretty common these days – almost every FSA provider gives you one to help using your funds (and tracking your spending) easier. But if you're new to FSAs (or at least new to these cards) you probably have some questions about how they work, where they can be used, what they're NOT for, etc. etc.
Well, if you haven't figured it out by now, we love making guides for these types of things.
A big-picture look at the humble-but-awesome FSA card
Flex spending cards are essentially the same as debit cards but used only to cover eligible medical expenses. In some cases, FSA holders who wish to access their funds are required to pay an out-of-pocket expense, and then submit receipts to their benefits administrator. Employees get reimbursed once the paperwork is submitted for eligible expenses.
FSA cards make the reimbursement process much easier by automatically withdrawing funds from the debit card. However, if an FSA holder opts to make a purchase with his/her card for a product or service that is a non-health care merchant, this merchant has to support an inventory information approval system (IIAS).
We could go into a lot of details about these systems, but there's no need to bore you with jargon. The key takeaway about these systems is: They verify eligibility so you're not hit with a surprise denial. When you use your card, the computers immediately recognize eligible vs. non-eligible expenses, so you can shop accordingly, and play by the rules!
That's basically it. BUT, if you ventured here wondering about the difference between FSA and HSA cards, guess what? They function in the exact same ways. And the information below will help you understand how to handle your card.
Ways to check the balance on your FSA card
- Log into patient portal
- Use the provider app
- Call TPA at the number provided
- Some retailers might also have balance information available at the bottom of their receipts.
Waiting to get reimbursed for an FSA-eligible item the traditional way can be a little mind-numbing—filing paperwork with your FSA administrator, waiting for approval and paying out of pocket in the meantime. Luckily, the FSA card streamlines the process.
The reason? Your FSA card is linked directly to your FSA. But here's the deal, FSA cards are slightly different than standard debit cards and come with their own set of rules. Here's what you'll want to keep in mind.
You can't withdraw money from an ATM
A significant difference between the FSA card and a standard debit card is that you can't grab cash from an ATM using your FSA funds. No - this is strictly for eligible health care expenses.
The easiest way to be sure your purchases are eligible is to shop at a store that exclusively sells FSA-eligible items (hint, you're already here). It removes the guesswork and allows you to focus on getting the items you need without having to file for reimbursement.
You can't use it in every store
It might sound obvious, but it's important to note that you can't use your FSA card at just "any" store, unless the purchases are eligible for FSA reimbursement.
In order to be able to use your FSA card, either the merchant category must be approved by the FSA administrator or card issuer, or the merchant must be specifically approved or the merchant must have a system in place to allow the use of the card on FSA-eligible items.
What to do if your card is lost
Having your payment information or identity stolen is about as scary and uncomfortable as it gets. And having it happen to your FSA is no different. But it's important to not panic.
We know money is money, but these accounts are as safe as any other banking you might do -- as long as you're careful and have good records of your purchases (yes, even with the card) all will turn out right.
What happens if I lose my FSA card or get hacked?
If a fraudulent purchase has been made with your FSA, you'll need to notify your administrator immediately so that they can open an investigation. Once the investigation is completed, your funds will be reimbursed into your account.
Keep in mind, your account will likely be shut off until the investigation is complete, and a new card will have to be sent to you. Keep this in mind when making additional purchases, so you can still use the traditional reimbursement approach to access the tax-free funds.
How to keep your FSA safe
While there isn't a 100% guaranteed method to preventing fraud, there are steps you can take to help keep your FSA safe. You'll want to treat your FSA card (and all of your account info, for that matter) with the same care and precautions that you would give any debit or credit card.
An FSA card doesn't have nearly as many places where it can be used, it's still a source of funds that people can purchase items they need. And because of that, it's important to treat FSA fraud like any form of card theft.
First off, it's pretty clear you should keep your physical card in a safe place where others can't easily access it. You should sign the back of your card as soon as you get it, and never store a PIN with the card.
Also, don't give your card number to anyone you don't trust. We could do another guide of all the places NOT to give your card number. But for now, one place you definitely shouldn't is over the phone, unless you're the one who made the call to a business or medical office, so you know the people you're speaking to are legit.
If you do give your card number out over the phone, make sure you're speaking with a reputable outlet, and are in a private place where others can't overhear the information.
(And never, ever provide your card number through email. No reputable store would ever ask you to do this. Shop smart, everyone!)
If you're making payments online, be sure to use a secure connection. Never make payments or enter your info over a public Wi-Fi connection. This makes you vulnerable to hackers who can easily access your account. Only make purchases from merchants that you trust who have a secure website.
Your FSA plan administrator is your friend
This all may seem obvious … but just for peace-of-mind and a quick resolution to any problems you might have, reach out to your plan administrator, to see their policies on processes, proper card use, etc. And always keep a copy of your confirmation for your records.
They can probably help you better organize and protect documents and receipts that may contain sensitive account information. And they can help keep your contact information up-to-date so no one else can try to access your account using older information.
What to do if your FSA card is declined
It's embarrassing when your credit card is declined because it feels like everyone in the store is looking at you. The good news is that you typically know how to handle it: call the bank, try a different card, or check your balance.
But what happens if your FSA claim is declined? It often feels similar, but the next steps can be confusing. Here's what you should know.
Regardless of why your card was denied, there's no need to be embarrassed. It doesn't mean you've done anything wrong and there's a good chance it's not even your fault. There are a lot of reasons an FSA claim might be denied -- and most have an easy fix. The first step is to figure out whether or not your card has been activated.
No, we're not kidding. Forgetting to activate your card is a common oversight with a simple solution: call your administrator or explore your company's benefits website to learn how to activate your card.
Double check your funds
Let's be honest: sometimes it's hard to keep track of everything and that includes your FSA card balance. If your FSA claim is denied, it might be because you had insufficient funds in your account or that the price of the item you tried to purchase is higher than your balance. Be sure to check your balance before you use your card again.
Make sure the merchant accepts FSA cards
For the most part, your FSA card should work where it makes sense; at locations like pharmacies, vision centers, doctor and dentist offices, etc. But if you try to use your card at a restaurant or bike shop, even if that bike shop happens to sell FSA-eligible bandages, chances are your card won't work.
If you have questions about whether or not a specific merchant will allow your FSA card, you can contact your FSA administrator to find out.
(But let's be honest, did you really think a restaurant was going to accept pre-tax health care funds for that lobster roll?)
The easiest way to ensure that your items or services are eligible is by checking out our comprehensive Eligibility List, and by shopping at a store that exclusively sells FSA-eligible items. It takes the guesswork out of shopping and decreases the chances that your FSA card will be declined.
Confirm with your employer that the item is FSA-eligible
The IRS determines which items are FSA-eligible. But employers can set their own eligibility rules as long as they're sticking to the IRS guidelines. In other words, it's important to check in with your FSA administrator and confirm that the item you tried to buy is FSA-eligible.
If your FSA card was declined but you decided to buy the item with a different card, then it's still a good idea to try and get reimbursed through traditional means. If you bought the item through FSAstore.com and the item was allowed under your plan guidelines, we guarantee that the item is FSA-eligible, so be sure to save your receipt and submit for reimbursement.
Other helpful FSA card tips
You should still save your receipts
Even though you won't need to file your receipts for reimbursement after every purchase, you'll still need to save your receipts. The IRS requires all FSA purchases be backed up with proof, so if your employer gets audited, you'll have to show itemized documentation of your FSA card purchases. Your administrator will also require you to submit receipts on select FSA card purchases.
In nearly every situation, the card will be accepted and processed without worry. But there's no better way to fight off "unpleasant surprises" than by keeping good records. You should always keep paperwork for charges, not just in the event of a denied charge. Depending on where you use the card, you may need to submit a receipt or documentation even if it was approved.
Why? Because if your benefits administrator denies an FSA card charge, having this paperwork handy to verify eligibility will save you time and hassle down the line.
Pro Tip: Use electronic receipts whenever possible. Just create a file in your inbox and simply move your receipts there throughout the year. It's a painless way to ensure you're following the rules.
You can still file manually
By now, you've probably figured out that an FSA card makes life simpler, but like we mentioned above, you don't have to use it. If there's ever a time when you forget it at home or are working with a medical provider that doesn't accept it, then don't worry. You can still file for reimbursement the old-fashioned way and submit receipts to your FSA administrator.
Paperwork. It's not something most people look forward to. Can't miss that it has the word "work" right in the name. But it can be a lot more interesting (and literally rewarding) if that paperwork leads to getting some of your hard-earned money back from taxes and in your pocket where it belongs.
You know, kind of like what happens with your flexible spending account (FSA). You see, even though FSA cards have made it easy to buy eligible health care products without paying tax, you've probably bought some things in the last year that qualify for FSA reimbursement. After all, there are SO many everyday health products and services like chiropractic appointments, allergy meds and more that you might have bought not knowing they were FSA-eligible.
(In other words, your FSA might "owe you one." We all like when that happens.)
But to get this money, you need to make sure your paperwork is in order, and your receipts match your claims. It sounds complicated, but it really isn't, as long as you know what you're doing. And that's where this guide to FSA claims and reimbursement comes in.
Over the next few sections, you'll get an everyday person's view on how to handle the organizing and filing of your FSA claims, so the only thing you need to do is sit back and enjoy your tax-free savings. Let's get started…
Gather those receipts!
You won't get far if you don't have receipts for the FSA claims you want to make. So whether you're tracking with a spreadsheet or a shoe box, take a few minutes to track down all the items and/or services you want to claim for reimbursement.
Remember, to be accepted for a claim, these need to be itemized receipts. That means they should have the following information:
- Patient Name: The name of the person who received the service or item. (Keep an eye on retail store receipts, which might not have this info.
- Provider Name: The provider that delivered the service or where the item was purchased.
- Date of Service: The date on which services were provided or the item was purchased.
- Type of Service: A detailed description of the service provided or item purchased.
- Cost: The amount you paid for the service or product and/or the portion that is not reimbursed through your insurance carrier. Note that if there is a service that was processed through insurance, you'll be looking for your Explanation of Benefits (EOB) from your health care provider for this information.
Know the Explanation of Benefits (EOB) form
We know, we know… more forms. But this is an easy one. Anything processed through your insurance will require an EOB to verify the need, service type, etc. to your FSA administrator. Basically, the form gives you a chance to state your case, and offer up any details needed to prove eligibility. It's not difficult, and it doesn't take much time.
What about itemized receipts?
Even though you might know what a particular receipt is for, it doesn't mean your FSA administrator will have the same understanding. The more info on the receipt, the clearer your request will be, and the easier it will be to get reimbursed. This is a good rule of thumb for any FSA owner.
If your administrator comes back and requests more documentation, don't worry -- you'll probably have a chance to resubmit. Whether that means finding a more-detailed receipt in a shoebox, or going back to the pharmacy to see if they can pull up a transaction record, there should be a better source of info out there.
Alright, let's file those FSA claims
Before we dive in, let's state one thing -- the more frequently you submit FSA claims, the easier it is to stay on top of your reimbursements throughout the plan year. Not only will you get the money faster (obviously) but it also serves as a good way to stay aware of your available FSA funds.
Our suggestion? Make it a regular habit -- either on a weekly cadence, or even as soon as you make a purchase, so you're always right on top of your available balance (a hearty spreadsheet saved to the cloud so you can access it anytime would be a good start).
When it comes to starting the filing process, your FSA administrator will usually have a specific way they want to receive claims. Some FSA administrators let you submit claims online, while others offer a form to complete. With most of the world moving these transactions online, there's a good chance you can submit this way for all expenses. But "most" doesn't mean "all" so be ready for some light paperwork if needed.
A quick look at the FSA claim form
Here's a brief breakdown of what you can expect from your own FSA administrator's claim forms:
First, you'll fill in your first and last name and employer name and you'll probably need to enter an account or personal ID number (this all depends on your administrator's account setup, of course).
Below that, you'll likely have to itemize each specific claim on its own line, detailing the following:
- Name of provider
- Service/purchase date
- Type of service
- Patient relationship (i.e., identifying if this for yourself or a qualified dependent)
- Cost of purchase or service that's eligible under your FSA
- Individual and total claim cost
Some things to remember. If you use your FSA to pay for a portion of a service that wasn't fully covered by an FSA, and an explanation of benefits wasn't provided, the administrator would likely need a detailed statement from the provider explaining the service before the claim would be approved. After all, the IRS (you know, the people handling your taxes) are very adamant that FSA expenses should only be for medical needs.
But that's really all there is to it. Just complete as much information as you have for each separate claim, making sure that all expenses are for yourself or qualified dependents, and that they fall within eligibility guidelines.
A quick refresher on dependents:
- An eligible dependent is defined as a spouse, qualifying child or qualifying relative. And a qualifying child is defined as a dependent child up to age 26, or any age if permanently disabled and otherwise qualifying.
- A qualifying relative is someone who resides with you for more than half of the year. Qualifying children and relatives must not provide more than half of his/her own support.
- A letter of medical necessity is required for any expense listed as such on our Eligibility List (and potentially others if your FSA administrator requires it). Basically, even if you think you need it, it won't be eligible unless deemed medically necessary by a licensed physician.
- Explanation of Benefits forms (EOBs) are recommended, in case your insurance covered a portion of the expense.
Finally, be sure that your receipts match the totals accurately, so there's no problems after you've sent the forms along. A little extra diligence now can save you a ton of hassle later. Which is really the theme of this whole guide.
Keep in mind, this is an overview -- your FSA administrator likely has a preferred way to file claims, so be sure to check with them before proceeding. But once it's done and submitted, sit back and relax - your FSA administrator can take it from here.
How will you get your FSA reimbursement?
Most FSA providers offer direct deposit for reimbursed funds, but others will issue paper checks. Typically (especially if you submitted online) these claims are processed quickly -- often within a few days of submission -- so you likely won't be without your money for very long.
Most FSA administrators have this process down to a science, and have made even the most-complicated FSA claims submissions an easy process, thanks to platforms, apps, user-friendly websites and clear language about eligibility guidelines. In other words, they empower you, the user, to maximize these accounts with as little effort as possible, so you can make the most of these fantastic benefits.
What if my FSA claim is denied?
We're glad you asked. It's never fun to deal with more paperwork, but sometimes a lack of clarity around an expense can lead to your claim being denied. Still, you shouldn't panic or give up -- sometimes there's a simple fix that can allow you to refile the claim and get reimbursed. It doesn't mean you've done anything wrong and there's a good chance it's not even your fault.
There are a lot of reasons your FSA claim might be denied and most have an easy fix. Here are just a few of the most common causes.
Less remaining funds than expected
Sometimes it's hard to keep track of these expenses, and that can affect your FSA balance. If your claim is denied, it might be because you had insufficient funds in your account or that the price of the item you tried to purchase is higher than your available balance. Be sure to regularly monitor your available FSA balance whenever making a purchase, so you don't overextend your benefit.
Items aren't FSA eligible
While the IRS determines which items are FSA-eligible, employers can set their own eligibility rules as long as they are within IRS guidelines. In other words, it's important to check in with your FSA administrator and confirm that the item you want to buy is eligible for tax-free spending.
If your FSA card was declined but you decided to buy the item with a different card, then it's still a good idea to try and get reimbursed through your FSA. Of course, this is the perfect moment for a shameless plug -- if you bought the item through FSAstore.com and the item was allowed under your plan guidelines, we guarantee that the item is FSA-eligible (as long as you're using your plan properly), so be sure to save your receipt and submit for reimbursement.
Your receipts don't match
If you submitted the wrong form, contact your FSA provider right away and see if you can resubmit. It's as simple as that. However, if you make a purchase and don't have a matching receipt, you may be able to substitute one from another qualified transaction.
Let's say you purchased sunscreen and realized you don't have the receipt. Instead, you may be able to find another receipt for a qualified purchase to offset your original purchase. Maybe you buy additional sunscreen at a different store and submit that receipt, instead. As long as the prices match, you should be okay.
In some cases you may not even need to submit a receipt, although we always advise that you keep them just in case. For example, if you used your FSA debit card to make a payment and at a qualified merchant with the proper system in place, your expense may even be automatically approved without the need for documentation.
Are there any other FSA claims mistakes I need to watch for?
Mistakes are normal, and they aren't the end of the world. But when you make a mistake with your FSA claims, you need to be able to fix them as soon as possible, so you're not caught paying for them later. In other words, you want to be sure that you're using your FSA correctly so that you're not required to pay your reimbursements back or stuck with money you can't realistically use.
Here are a few common errors that could lead to bigger issues, if you're not careful.
One common mistake is paying for an FSA-eligible expense with your FSA card, and then submitting the same expense for reimbursement. Most benefits administrators can catch these mistakes pretty quickly.
But if a claim does go through and you get reimbursed twice for the same expense, you'll have to pay it back to your administrator if (and let's be real -- when) they become aware of the issue.
Claiming through separate accounts
Let's say you and your spouse each have FSAs through your respective employers. If you pay for a copayment or FSA-eligible product and submit a claim for that expense under both accounts, this is another clear example of double dipping.
Get ahead of this -- keep your claims separate for each account to avoid problems down the line.
Paperwork might not be the most-exciting thing to discuss … well… ever. But when it comes to eligible items and services you might have purchased during your plan year, the paperwork can result in some big savings. After all, it's your money -- a little legwork can mean a lot more of it in your wallet, and less of it lost due to forfeiture or denied claims.
Using the tips here, some diligent record-keeping with receipts, and a conversation (or two) with your FSA administrator, filing FSA claims and receiving reimbursement can be an easy, effortless process for making the most of your tax-free funds.
In short, an LMN is like a doctor's note. Having an LMN can help you get FSA reimbursement for any product or service that falls outside the IRS definition of "medical care" (but can assist the treatment of a condition).
In other words -- LMNs can be really helpful in getting you the products and services you need with your tax-free funds, without having to try and explain it in a reimbursement claim after the fact. But why explain it in text when our team does it way better in our latest video?
And for a closer look at LMNs, along with a healthy dose of everything flex spending, check out the rest of our Learning Center!