How to Use Your HRA Debit Card for Medical Expenses

A Health Reimbursement Arrangement (HRA) debit card provides a direct way to manage healthcare costs. An HRA is an employer-funded health benefit designed to reimburse employees for qualifying medical expenses. This system allows individuals to pay for eligible health services and products without first paying out-of-pocket and waiting for reimbursement.

Understanding Eligible Health Care Expenses

Health Reimbursement Arrangement eligible expenses are defined by Internal Revenue Service (IRS) guidelines, specifically Internal Revenue Code Section 213. This section broadly covers costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Common examples of eligible expenses include deductibles, co-payments, and prescription medications. Vision care, such as eyeglasses and exams, and dental care, including routine cleanings and fillings, are also covered.

Many over-the-counter medicines and drugs are eligible for reimbursement without a prescription. However, expenses that are merely beneficial to general health, like vitamins without a medical diagnosis, or cosmetic procedures not for medical reasons, are not eligible. It is important to remember that while IRS guidelines provide a framework, specific plan rules can vary significantly. Employees should consult their plan administrator’s Summary Plan Description (SPD) or benefits guide for a definitive list of what their particular HRA covers.

Practical Steps for Using Your HRA Debit Card

Using an HRA debit card for eligible expenses is similar to using a standard debit or credit card. When making in-person purchases, such as at a pharmacy or doctor’s office, the card can be swiped or inserted at the point-of-sale terminal. If prompted, selecting “credit” often processes the transaction without a Personal Identification Number (PIN), though some systems may require one. For online purchases, the card number, expiration date, and security code are entered as with any online payment.

The HRA debit card is restricted to merchant category codes related to healthcare providers and goods. This ensures that purchases are aligned with eligible medical expenses. For mail-order prescriptions or when paying medical bills over the phone, the card details can be provided to the vendor. The expense must align with the plan’s eligible items, as determined by the guidelines discussed previously.

Documentation and Verification Requirements

Documentation is a necessary step for HRA purchases to ensure compliance with IRS regulations. After using an HRA debit card, individuals may need to provide substantiation for the transaction. Required documentation includes an itemized receipt showing the date of service or purchase, the provider’s name (e.g., clinic, pharmacy, or store), a description of the service or item, and the amount paid. For services covered by insurance, an Explanation of Benefits (EOB) statement is also a valuable document as it details the services rendered, the amount billed, and what the insurance covered.

The process for submitting documentation varies by plan administrator but includes online portals, mobile applications, or mail. It is important to submit this information within the timeframe specified by the plan, which is commonly within 90 days or a few months after the plan year ends. Failing to provide adequate documentation for a purchase can lead to a repayment request for unsubstantiated expenses. If a transaction is flagged for review, the plan administrator will notify the cardholder, requesting the necessary documentation to verify eligibility.