More paperwork required to use 'Flex Convenience' debit cards

BY BARBARA PALMER

The "Flex Convenience" debit card, which employees can use to pay expenses directly out of their flexible spending accounts, comes with more paperwork this year.

Changes in the way that expenses are reviewed by ProBusiness, which administers employees' flexible spending accounts, has made it much more likely that employees will be asked to send in receipts documenting medical expenses charged to the cards, said Sue Cunningham, benefits programs manager for Human Resources. ProBusiness is requesting increased documentation for some expenses in order to comply with Internal Revenue Service regulations, she said. The change in procedures is a result of discussions and an agreement between ProBusiness and the Internal Revenue Service last year, added Cunningham.

The debit cards, which can be used to pay eligible expenses directly out of medical and dependent care spending accounts, first became available to employees in 2003.

In 2004, only expenses under $80 that exactly match co-payment amounts seem to be going through the system without eliciting requests for receipts to ProBusiness, Cunningham said. "It's not every claim, but [the number of requests for verification are] much higher than last year," she said. Since IRS regulations require employees to submit receipts upon request for any expenses paid for with the cards, employees should routinely save all receipts, Cunningham said.

Letters explaining Flex Card regulations were available at Benefits Fairs held last fall and were mailed to employees' homes in January.

When ProBusiness sends out requests for receipts, employees have 15 days to fax or mail documentation to ProBusiness verifying the date(s) of service, description of services, provider and costs, including insurance payments or adjustments. If verification is not received by ProBusiness, cards are deactivated after 30 days. The time limits are determined by federal guidelines, Cunningham said.

The additional paperwork is in some ways regrettable, since it makes using a health care spending account less convenient, she said. But using the Flex Card still eliminates the need for employees to pay eligible expenses up front and wait for reimbursement, she said. And having a health care spending account remains a fairly easy way to get tax benefits, she said.

In addition, effective for 2004, the cards may be used to pay for over-the-counter drugs purchased to treat personal injuries or illness. (Vitamins and supplements are not eligible.) The IRS changed regulations to allow reimbursement for over-the-counter medications last year, Cunningham said. For over-the-counter transactions, ProBusiness requires a receipt that has the date of service, name of drug or medication, and charge.

Cunningham said her office and ProBusiness have been looking at ways to make the cards easier to use, including automatically transferring data from Express Scripts to ProBusiness. Beginning in 2004, employees enrolled in university health care plans are covered by Express Scripts, a separate prescription drug benefit.