What Is an FSA Card, and How To Use It?

If you have or are about to receive access to your Flexible Spending Account, you may need some basic information regarding FSA debit cards and how to use them. This will help you understand the benefits and limitations of FSA funds and how you can manage them in your day-to-day life.

In this article, we will explain FSA medical meaning, what exactly an FSA card is, how to use it, and answer some common questions regarding this payment method.

What Is a FSA Card?

Let’s start from the beginning – what is the FSA meaning?

Flexible Spending Accounts, which is where your FSA card funds come from, are used by employees to pay for their health expenses, like copayments, deductibles, or drugs. The money on it is tax-free, but it needs to be used within a year, as otherwise, it goes back to the employer. There are only two instances when that doesn’t happen – the employer decides to give you an additional 2,5 month period to spend it, or you move a maximum of $610 into the next plan year. Unfortunately, you cannot benefit from both at the same time.

An FSA card is used to withdraw funds from an FSA in order to pay for health care services immediately, rather than having to cover the expenses first and get reimbursement later, which requires quite a bit of paperwork.

Most FSA cards are issued to help pay for various eligible health care expenses that are not included in your health care plan, but they can also be used to cover the costs of dependent care and transportation expenses.

An FSA card is a great convenience for an employee who doesn’t have to go through the entire process of applying for reimbursement when paying for medical services. The Internal Revenue Service (IRS) uses these cards to automate the substantiation requirements, using the card transactions to perform “auto-adjudications.”

When making transactions with approved merchants, you will not be required to provide additional documentation, as this purchase will likely get auto-approved. The qualifying merchants include:

• medical providers, such as doctors and hospitals
• pharmacies
• stores that have pharmacies
• Amazon.com
• merchants with an inventory information approval system (IIAS)

An FSA card works just like any other card, so it has a specific balance on it. If you’re not sure if it’s going to be enough to cover your expenses, you can check how much is on there by:

• logging into your FSA plan portal
• calling the number of your FSA provider
• using the FSA app to access your account

How to Use an FSA Card?

To benefit from FSA, you first need to enroll in the FSA plan and decide how much of your pre-tax income should be spent to cover the out-of-pocket medical expenses. After that, you are free to use your FSA card, just like any other card, to pay for eligible items and medical services. Remember, however, that only approved items can be covered with money from an FSA.

What Items Are Eligible for FSA?

The general rule is that you can pay with an FSA card for medical services and items that are not included in your health plan. Amongst FSA-eligible items, there are:

• medical services, doctor visits, and dental expenses for you, your spouse, and your dependents
• your deductibles and copayments, but not your health insurance premiums
• prescription medications and over-the-counter medications if you have a doctor’s prescription
• insulin, even without a prescription
• various medical equipment
• medical supplies
• vision expenses, including vision aid such as eyeglasses or contact lenses

What To Do When Your FSA Card Gets Declined?

Sometimes you may encounter the situation when your FSA card is declined. It’s not a pleasant occurrence, but there are some things you can do to amend it.

First, you should check if your FSA card is active. People often forget about this step, but fortunately, it’s a quick fix.

If that is not the problem, the next thing you want to do is check whether the entity you’re buying from accepts FSA transactions. Most of the time, it is straightforward. Places like hospitals, doctor’s offices, or pharmacies are where transactions with this card are allowed.

But in a store that sells only some FSA-eligible items, this may be more confusing. It’s close to impossible to pay for completely non-medical-related items and services with an FSA card, so if, for example, you’re at the car shop, it’s very likely that your transaction will be declined.

If you know for a fact that your FSA card should be accepted, you can also check your balance. Memory can be unreliable, so it’s possible you might not have as much money in the account as you thought.

Another option is to contact your employer to check the eligibility of a particular item. Contact your FSA provider to see whether or not you have the right to pay for it with the card. If not, you can purchase it via your debit card and apply for reimbursement later.

Does Your FSA Card Impact Your Credit Score?

No, an FSA card will not impact your credit history. It’s because it’s not really a credit card. You’re not lending money to make purchases. You’re using money from your income that is transferred to your FSA.

Is an FSA the Same Thing as an HSA?

No, FSA and HSA are not the same, although they are similar. Health savings accounts are used with more traditional health plans, whereas HSAs are designed for high deductible plans.

Unlike FSAs, HSA money can be transferred from one plan year to another. The contribution limits are also higher with HSAs, and HSA can be combined with a High Deductible Health Plan.

Final Thoughts

An FSA debit card is a valuable tool for making transactions in stores, pharmacies, and medical facilities. You can use it just as you would use a traditional debit card, with some limitations in place.

If you’re enrolled in FSA, then having an FSA card is the best way to pay for the eligible items. You’re saving time, stress, and paperwork.