What Is a Flex Card Used For and What Can You Buy?

A flex card functions as a specialized payment method for healthcare-related expenses. This card allows individuals to pay for qualified medical costs using pre-tax funds, offering a financial advantage by reducing taxable income. Understanding its usage helps individuals effectively manage their healthcare spending.

What is a Flex Card?

A flex card is a dedicated debit card linked to tax-advantaged benefit accounts. It serves as a direct payment tool for specific health-related purchases, drawing funds from designated pre-tax accounts. This ensures that money spent on eligible medical services and products is not subject to federal income taxes.

The card accesses funds from accounts such as a Flexible Spending Account (FSA), a Health Savings Account (HSA), or a Health Reimbursement Arrangement (HRA). An FSA allows employees to set aside pre-tax money from their paycheck for out-of-pocket healthcare costs. An HSA is a savings account for individuals with high-deductible health plans, allowing them to save and spend pre-tax money on qualified medical expenses. An HRA is an employer-funded account that reimburses employees for out-of-pocket medical expenses and premiums.

Eligible Expenses

The Internal Revenue Service (IRS) defines eligible medical expenses. These are costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any structure or function of the body. Common eligible expenses include doctor visits, hospital stays, prescription medications, and dental care services such as cleanings, fillings, and orthodontics. Vision care is also covered, encompassing eye exams, prescription eyeglasses, contact lenses, and necessary contact lens solutions.

Over-the-counter medications are often eligible, though some might require a prescription or doctor’s note. Medical devices, such as blood pressure monitors, crutches, or bandages, are covered. Certain transportation costs incurred to receive medical care can also qualify. Conversely, expenses like cosmetic procedures, general wellness items not prescribed for a medical condition, or toiletries are not eligible. Individuals should consult their plan administrator or IRS Publication 502 for a comprehensive list and to confirm specific eligibility criteria.

Using Your Flex Card

Using a flex card at the point of sale is similar to using a regular debit card. When making a purchase, the card is swiped or inserted, and the transaction processes directly from the linked benefit account. Many merchants, particularly pharmacies and healthcare providers, use an Inventory Information Approval System (IIAS) to automatically verify if items purchased are eligible medical expenses. This system streamlines the payment process by recognizing qualified items at checkout.

Even with IIAS, plan administrators often require substantiation for transactions to comply with IRS regulations. Substantiation involves providing documentation, such as an itemized receipt or an Explanation of Benefits (EOB), to prove the purchase was for an eligible expense. This documentation confirms the date of service, the type of service or item, the provider, and the amount paid. If a purchase cannot be properly substantiated, or if it is for an ineligible expense, the cardholder may be required to repay the amount spent. Flex cards are accepted at various healthcare locations, including doctor’s offices, dental clinics, vision centers, pharmacies, and some online medical supply stores.