Employee Benefits
Flexible Benefits - Medical FRA Stored Value Card Guidelines
There are substantiation requirements with the medical reimbursement account (MFRA) stored value card that must be enforced to keep the program in compliance with IRS regulations. Employees can use the card, having full access to their medical account balance at the point of service; however, every claim must be validated as an expense eligible for reimbursement under the program. (Note: The requirement for validation of an expense as eligible for reimbursement under the program is the same whether the participant has used a stored value card or filed a paper claim directly with the vendor.) The claim expense using a stored value card can be validated in the following ways:
- Known Co-payment – the vendor must obtain the employee's health plan copayment amounts. If the card is being used with a provider with a healthcare merchant code, such as a doctor or hospital, and the charge is exactly equal to the copayment amounts, the charge may be automatically approved. The employee does not have to provide any additional documentation or receipts.
- Inventory Information Approval System (IIAS) – Non-health care merchants, such as grocery and drug stores, use a system, IIAS, which will automatically validate the expense as a qualifying over-the-counter drug or supply. The employee will not have to provide any additional documentation.
- “After-the-Fact” Validation – the employee can use the MFRA stored value card for eligible medical expenses at health care merchant, such as a dentist, then submit the documentation to the vendor to confirm the use of the card for an expense eligible for reimbursement under the program.
If an employee fails to provide the required “after-the-fact” validation, the plan is required to use the following corrective procedures:
- De-activation of the card. (Note: The employee can still submit paper claims for reimbursement during this time),
- Request for re-payment of the expense by the employee with a personal check,
- Reduction of eligible claim reimbursements by the amount of the card transaction(s), and finally,
- Reclassification of the improper payment as income to the employee.
Following is a link to this information on the Department of Treasury web site:
(http://www.treas.gov/press/releases/reports/section125.pdf)
