Flex Debit Card
New and Improved for 2008!
See .pdf version here
The Flex Debit Card is a MasterCard® debit card that employees can use to pay for eligible health care and dependent care expenses at qualified locations where MasterCard® is accepted. Approved expenses are automatically debited from their Health FSA or Dependent Care FSA accounts, without the necessity of filing claims prior to reimbursement.
Recent changes in IRS guidelines and card technology make the Debit Card easier to use than in previous years. While the IRS still requires every Debit Card charge to be adjudicated, new inventory-based adjudication systems ("IIAS") at over 70 retail chains provide additional auto-adjudication opportunities and reduce the need for confirming documentation. The Debit Card is a convenient and effective reimbursement method that will benefit employers and employees.
Who Benefits from the Flex Debit Card?
Employers:
- Plan participation increases, saving the employer at least 7.65% in FICA taxes for every employee dollar contributed
- Helps employees better manage cash flow concerns
- No additional costs for Debit Card after a nominal $150.00 startup fee
Employees:
- Instant access to Medical and Dependent Care FSA funds, reducing out-of-pocket expenditures
- Reduces need to file claim forms and documentation prior to reimbursement
- Card charges are auto-adjudicated at many merchants
What are the advantages of the Debit Card?
The Debit Card provides plan participants with the convenience of a cashless transaction. Instead of paying for eligible expenses and filing a claim to be reimbursed, the Debit Card pays the expense directly from the participant's Health FSA or Dependent Care FSA. This eliminates the participant's need to pay for expenses out-of-pocket before they are reimbursed, resulting in greater value from the plan and higher employee participation.
Will participants still need to submit receipts?
Sometimes. Contrary to what some entities advertise, the IRS regulations still require that every claim (Debit Card or paper claim) must be adjudicated. However, the IRS has permitted many cases where expenses may be "auto-adjudicated." For every card swipe, participants will receive a series of emails advising them of the status of the claim and whether documentation is needed. Also, it is important to remember that even if claims are auto-adjudicated, the IRS requires that participants obtain and keep confirming documentation for all expenses.