What Can I Use My Benefits Card For?

Using a benefits card provides a streamlined approach to managing healthcare expenses, allowing individuals to leverage pre-tax dollars for various medical, dental, and vision costs. These cards, linked to accounts such as Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs), offer a valuable financial tool. By utilizing these tax-advantaged funds, individuals can effectively reduce their out-of-pocket healthcare spending. The primary objective of these cards is to simplify the payment process for eligible health-related services and products, ultimately contributing to better financial planning for healthcare needs.

Understanding Your Benefits Card

Each benefits card type has distinct rules governing its use, funding, and portability. Health Savings Accounts (HSAs) are available to individuals enrolled in a high-deductible health plan (HDHP). Funds contributed to an HSA roll over year to year and remain with the individual even if they change jobs. HSAs also offer an investment component, allowing funds to grow tax-free over time.

Flexible Spending Accounts (FSAs) are employer-sponsored and allow employees to contribute pre-tax dollars for healthcare expenses. Unlike HSAs, FSAs operate on a “use-it-or-lose-it” basis, though some plans may offer a limited carryover amount or a grace period of up to 2.5 months. Funds in an FSA are not portable if you leave your employer. Health Reimbursement Arrangements (HRAs) are solely employer-funded and designed to reimburse employees for qualified medical expenses. HRA funds usually roll over from year to year but are tied to the employer, so they are not portable if employment ends.

Eligible Medical Expenses

Benefits cards can be used for a wide array of eligible medical expenses, defined by Internal Revenue Service (IRS) guidelines. These expenses cover costs related to the diagnosis, cure, mitigation, treatment, or prevention of disease, and treatments affecting any part or function of the body. This includes common healthcare services like doctor visits, co-pays, and deductibles. Prescription medications, including insulin, are eligible.

Over-the-counter (OTC) medications and items, such as pain relievers and first-aid supplies, are also eligible without a prescription. Dental care expenses, including exams, cleanings, fillings, and orthodontia, can be covered. Vision care, encompassing eye exams, prescription eyeglasses, and contact lenses, qualifies as an eligible expense.

Benefits cards can fund a variety of other medical services. These include chiropractic care, acupuncture, and mental health services like therapy and counseling. Medical equipment and supplies, such as crutches and bandages, are also eligible. The cost of transportation primarily for medical care, such as mileage to and from appointments, can be reimbursed. Specific expenses, like breast pumps, smoking cessation programs, and some sunscreens (SPF 15+ with broad-spectrum protection), are also eligible.

Non-Eligible Expenses

While benefits cards offer broad coverage for healthcare costs, certain expenses are not eligible for reimbursement. Cosmetic procedures are excluded unless necessary to correct a deformity resulting from a congenital abnormality, personal injury, or disfiguring disease. Items considered beneficial to general health rather than specific medical conditions are not covered. This includes general toiletries and most vitamins unless prescribed by a medical practitioner for a diagnosed condition.

Insurance premiums are not eligible for reimbursement with most benefits cards, though HSAs have exceptions for certain types of premiums, such as long-term care insurance, COBRA continuation coverage, and Medicare Part A, B, or D premiums. Expenses for general health and wellness, such as gym memberships, are not eligible unless a doctor prescribes them as treatment for a specific diagnosed medical condition. Items for personal convenience or comfort, like teeth whitening or baby bottles, are also not covered.

Using Your Card and Substantiation

Using a benefits card at the point of sale functions like a regular debit or credit card, allowing for direct payment for eligible expenses. Many merchants, particularly pharmacies and retailers, utilize an Inventory Information Approval System (IIAS) that automatically identifies eligible items, streamlining the transaction process. For other purchases, such as doctor visits, the card can be used directly, though sometimes an alternate payment method is required, followed by a reimbursement claim. If a transaction is declined, reasons include insufficient funds, non-eligible items, or an unqualified merchant code. In such cases, paying out-of-pocket and submitting a claim for reimbursement is a common solution.

Thorough records are important for all transactions, as the IRS requires substantiation for expenses paid with Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs). Substantiation involves providing documentation, typically an itemized receipt or an Explanation of Benefits (EOB), that details the service or product, date, provider, and expense amount. While some transactions may be auto-substantiated, many will require manual verification by the plan administrator.

For Health Savings Accounts (HSAs), individuals are responsible for retaining their own substantiation documentation for at least seven years in case of an IRS audit, as the plan administrator does not require upfront substantiation. Failure to substantiate an expense for an FSA or HRA can lead to consequences, including requests for repayment, card deactivation, or the amount being treated as taxable income. If a claim cannot be substantiated, plan administrators may require repayment of the funds or offset the unsubstantiated amount against future eligible claims.