How Do You Get Cash From an FSA Card?

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows individuals to set aside pre-tax money for eligible healthcare expenses. This arrangement reduces taxable income, leading to potential tax savings on funds used for medical, dental, and vision costs. A common tool for accessing these funds is the FSA debit card, which functions similarly to a regular debit card but is specifically for qualified medical expenditures.

FSA Card Functionality and Restrictions

An FSA debit card is generally not designed for obtaining cash directly, such as through ATM withdrawals or cash back at a point of sale. Attempting to withdraw cash from an FSA card for non-qualified purchases is prohibited and can lead to penalties or account suspension. The Internal Revenue Service (IRS) regulations stipulate that FSA funds must be used exclusively for eligible healthcare expenses.

The Reimbursement Process

Individuals can effectively receive funds from their FSA by first paying for qualified medical expenses using personal funds. This method is particularly useful when a healthcare provider or merchant does not accept the FSA card directly.

After making the out-of-pocket payment, individuals need to gather specific documentation to support their claim for reimbursement. Necessary documentation typically includes an itemized receipt detailing the service or product, the date it was incurred, the provider’s name, and the amount charged. For services covered by insurance, an Explanation of Benefits (EOB) form from the insurance provider can also serve as valid documentation.

Once the documentation is assembled, a claim is submitted to the FSA administrator, often through an online portal, mobile application, or by mail. Upon approval, the administrator processes the reimbursement, usually via direct deposit to a personal bank account within one to two business days or by check within seven to ten business days.

Using Your FSA Card Directly

The most common and convenient way to utilize an FSA card is by presenting it directly at the point of sale for eligible medical expenses. This method streamlines the payment process, often negating the need for manual reimbursement claims. When swiped at pharmacies, doctor’s offices, or other healthcare merchants, the card draws funds directly from the FSA.

Many retailers and healthcare providers use an Inventory Information Approval System (IIAS) or auto-substantiation technology. This system automatically verifies whether purchased items or services are qualified medical expenses according to IRS guidelines at the time of the transaction. If an item is eligible, the system approves the purchase, allowing the transaction to proceed seamlessly without requiring additional documentation from the cardholder at that moment.