What is Debit Card Substantiation?

Debit card substantiation is the process of verifying that purchases made using a debit card for flexible spending accounts (FSA) or health reimbursement arrangements (HRA) were for an eligible medical expense. These purchases must be substantiated per IRS guidelines.

If a healthcare debit card is used for an eligible expense, typically receipts or documentation will need to also be submitted in order to support that the card was used for an eligible expense. According to IRS specifications, there are two ways to substantiate claims. First, is by auto-substantiation. These charges are made automatically through an electronic method by matching the copay amount, a fixed recurring claim or by real-time substantiation which are verified as eligible expenses by using the IIAS system. The IIAS system is an inventory information approval system that requires merchant point-of-sale systems to automatically verify that items being purchased using a FSA or HRA card are eligible medical expenses. When an item is purchased, the SKU number will be compared with a list of eligible SKUs to ensure it can be covered. If it is not an eligible medical expense, the transaction will be declined.

Second, is by manual substantiation. All purchases must be verified with receipts or other supporting documentation where the amount paid does not match a copay amount or for a prescription in which the pharmacy is not IIAS compliant.

All receipts or documentation must include the name of the person who incurred the expense, name/address of service provider, date and description of service and amount charged.

EOBs contain all of the necessary information to substantiate purchases made using a debit card. TPA Stream has built a proprietary cloud based software to reduce the need for extra paperwork and documentation needed for substantiation by connecting the employee’s insurance information, automatically harvesting their EOBs and processing claims. This reduces the strain on the employee to submit this extra paperwork and works behind the scenes to create a seamless workflow. As a result, administrative costs are significantly reduced and employees avoid the hassle of submitting claims. Are you an administrator or broker and want to learn more about TPA Stream?  Visit us at www.TPAStream.com  or send us an email at sales@tpastream.com  to schedule a demo.

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