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FSA, HRA and HSA Benefits Funds on Debit Cards

In a 2019 survey, GOBankingRates found that more than 37% of Americans preferred using cash to credit and debit cards. Since then, the pandemic has shifted many of those opinions as people became concerned about acquiring or passing germs by touching things. This has accelerated the use of cash alternatives such as debit cards and electronic payments. 

You can use credit and debit cards almost everywhere, including many vending machines. Cards provide many conveniences from minimizing contact with surfaces touched by others to rewarding usage volume and frequency with redeemable points. 

Debit cards can be issued for Flexible Spending Account (FSA) and Health Savings Account (HSA) benefits, and also for many Health Reimbursement Arrangements (HRA). Offering the debit card option increases adoption and usage rates and increases convenience for both employers and employees.

Debit Cards by Plan Type

Flexible Spending Account (FSA)

Use your FSA debit card to pay for eligible expenses. Some places are making it easy to spot approved items, and many card processors don’t even make you submit a claim. There are also online stores which make buying eligible items easy by clearly marking FSA eligible items. And specialty online retailers like FSAStore.com make it even easier by only selling FSA eligible items. This makes it easy for FSA account holders to shop efficiently while reducing, if not stopping, fraud and misuse on the items that don’t qualify.

If you have Dependent Care FSA (also known as a DCAP) funds on a debit card, you can use it to pay your childcare provider the required tuition and/or eligible fees.

Health Reimbursement Account (HRA)

If your company offers HRAs, they may offer a debit card for the employer share of approved expenses. Traditional HRAs cover deductibles, coinsurance and copays. Due to the way HRA plans pay, however, debit cards for HRA accounts are often not practical.

Health Savings Account (HSA)

HSA funds can also be linked to a debit card. Like an FSA, retailers often identify eligible items with special signage, and there are specialty merchants like HSAStore.com that sell only HSA-eligible items. Your HSA account may include access to online electronic storage where you can “park” debit card receipts in order to use at tax time or submit for reimbursement later on. 

Important Reminder

Even though your benefits debit card is just that, a debit card, you cannot use it anywhere that debit cards are accepted. Benefits debit cards are coded to work only in merchant credit card terminals that are eligible to accept them. For example, you can’t use a benefits debit card at gas stations, restaurants, to withdraw cash at ATMs, and so on.

For more information about your benefits debit card, or to find out if your plan offers them, contact your third-party administrator (TPA) or HR department.

The Adventures of Captain Contributor is an employee education and engagement program developed by DataPath, Inc.