The Internal Revenue Service has issued guidelines in an effort to help the companies that are developing health account payment card systems.
The guidelines, given in IRS Notice 2006-69, spell out some of the rules workers and employers must follow to show that they are spending health account assets on a qualified items, such as visits to doctors and allergy pills, and not on items such as books or hairbrushes.
Because the law that created health savings accounts does not require members of employer-sponsored HSA plans to “substantiate” purchases, the new notice applies mainly to workers who are using debit cards to draw on flexible spending accounts and health reimbursement arrangements.
Card system vendors are pushing for substantiation rules that minimize the number of times card users must provide paper receipts to document health account expenditures.
Up till now, the card companies have focused mainly on setting up electronic substantiation programs involving large drug store chains.
Under the Notice 2006-69 rules, any retailer can accept health cards if it uses “stock keeping units” or other inventory control information when approving or rejecting health account card transactions, officials write in the notice.
“Card transactions using this method are fully substantiated without the need for submission of a receipt by the employee or further review,” officials write.