Skip to main content
  • Solutions for Employers

    Enhance your benefits program with a custom strategy that not only engages your employees and helps retain your talent—but also lightens the load on HR.

    How We Help
    • Strategic Partner
    • Professional Enrollment
    • Benefits Education
    • Total Benefits Solution
    • Benefits and Services
    Who We Serve
    • Education
    • Public Sector
    • Automotive
    • Manufacturing
    • Healthcare
  • Resource Library

    Explore our catalog of blog articles, educational videos, customer stories, and more.

    View All Resources

    Resource Types
    • Blog Articles
    • Videos
    • Customer Stories
    • Tools
    • Help Center
    • All Resources

    An Employer's Guide to a Successful Enrollment

    Download the free how-to guide to get your enrollment strategy on the right path. 

    Download Now
  • Help Center
  • Login
  • Strategy
  • Reimbursement Accounts
  • Supplemental Benefits
  • Customer Stories
  • Compliance
American Fidelity Logo

Why is documentation required for every FSA purchase?

January 17, 2019

3 minute read

Category: Reimbursement Accounts

person typing information from a credit card into a computer

Providing documentation is one of the most common points of confusion and frustration for Flexible Spending Account (FSA) and Health Reimbursement Arrangement (HRA) participants. However, the solution is quite simple – all purchases must be substantiated.

What does the IRC say about FSA documentation?

IRC Section 125 Plan regulations state that all reimbursement account expenses must be substantiated. The substantiation may come in the form of a receipt or Explanation of Benefits (EOB) from a medical provider. The purpose of substantiation is to verify that the expense is an eligible expense under the employer’s Section 125 Plan, is an expense for an eligible plan participant, and prove that it was purchased during the participant’s plan year.

How are Benefits Debits Card purchases substantiated?

Some Third-Party Administrators provide FSA or HRA debit cards as a convenience to participants so that they do not have to pay for eligible expenses out of pocket and request reimbursement. When a participant pays out of pocket, it is reasonable they would need to provide a receipt to request reimbursement for the qualified expense. However, when a participant uses a debit card, the money is taken out of the reimbursement account automatically, so providing a receipt is not always top of mind. When a participant uses a Benefits Debit Card to purchase an eligible item, substantiation must still be provided. This is a common source of confusion, because participants may assume the expense is auto-substantiated.

Auto-substantiation is applied by some merchants to qualified Benefits Debit Card transactions. For example, merchants that have an inventory information approval system (IIAS) can verify if an expense is qualified or not at the time of purchase. Also, auto-substantiation is possible for verified co-pay amounts and recurring expenses that have already been substantiated. These expenses may not require additional documentation from the participant because the purchase has already meet substantiation requirements behind the scenes. However, participants are encouraged to keep documentation in case the auto-substantiation is not successful.

How does American Fidelity approach compliance?

Because the IRC states that all expenses must be substantiated, American Fidelity requires documentation for every FSA and HRA claim. It is our goal to help both our employers and their participants stay compliant with Section 125 Plan rules.

To make substantiation easier for our customers, we provide a mobile app for submitting documentation on the go, and encourage participants to “Snap, Submit, and Go!” immediately after a purchase. 

If you have questions about Section 125 Plan compliance or FSA documentation, contact our Section 125 Administration team.

 

This blog is up to date as of December 2018 and has not been updated for changes in the law, administration or current event.

  • Tags:
  • FSA
  • HCFSA
  • DCA
  • LPFSA

Share:

FSA Store

Shop for Eligible Items on the FSA Store

You may purchase FSA-eligible items online at the FSA Store. Browse medical supplies, over-the-counter medication, prescriptions, and more.

Visit FSAStore.com

Purchases may result in a small commission to American Fidelity at no additional cost to you.

Related FSA Articles

What Are Dependent Care FSA-Eligible Expenses?

April 22, 2025

Dependent Care Accounts (DCAs) may help provide coverage for everyday dependent daycare expenses.

  • Tags:
  • FSA

Carryovers, Grace Periods, and Runoff Periods - What Are the Differences?

January 14, 2025

5 minute read

“Use or Lose!” – Deciphering the difference between carryover provisions, grace periods, and runoff periods

  • Tags:
  • FSA
  • HCFSA
  • LPFSA
  • DCA

Carryovers and Grace Periods: Avoid Losing Unused FSA Funds

January 09, 2025

4 minute read

While FSAs must adhere to the “use-or-lose” rule, employers may offer one of two options to help you avoid having to forfeit your unused funds.

  • Tags:
  • HCFSA
  • FSA
  • LPFSA

Our logo
  • Strategic Partner
  • For Education
  • For the Public Sector
  • For Automotive
  • For Manufacturing
  • For Healthcare
  • Professional Enrollment
  • AFenroll®
  • Benefits Education
  • Total Benefits Solution
  • Culture and Engagement
  • Benefits and Services
  • Resource Library
  • Blog
  • Customer Stories
  • Tools
  • Help Center
  • Forms
  • AFmobile® App

Contact Us

Careers

  • About Us
  • Annual Report
  • Community Giving
  • News Center
  • facebook
  • Youtube
  • linked-in

© 2025 American Fidelity Assurance Company

  • Privacy Notices |
  • Report Fraud |
  • Terms of Service |
  • Licensing |
  • Special Notices |
  • Accessibility |
  • Cameron Enterprises

ESB-7196-1218