The use of debit cards at POS for FSA's

[Guest Robert Mapes]

A number of companies are selling debit(Visa) cards that allow a FSA participant to pay for medical expenses at POS. The IRS has said "no way", unless someone can assure them that the card is being used for legitimate expenses and not to buy lawn chairs at CVS. I have a number of questions:

1. Is anyone currently using this type of card?

2. Do you agree with the position of the IRS?

3. Can the charges be validated at POS? Will current technology allow this?

4. Will these cards help reduce administrative costs?

[Lisa Hand]

As a plan service provider, we require independent third-party verification of expenses and VISA receipts do not normally meet that requirement. Additionally, it is when the service is incurred, not when it is charged, billed or paid for, which determine the date of service. Finally, most expenses are eligible for at least some insurance coverage and the actual amount paid by insurance is usually not clear until the expense is processed through the insurance and an explaination of benefits is issued.

Finally, a better way to control administrative costs is to out-source the benefit to an organization which specializes in its administration.

[Guest VSB]

My husband and I have a medibank Flex Convenience card that allows us to pay for our normal FSA expenses with the card. It is a MasterCard that works everywhere MasterCard is accepted. I understand the IRS said this product is ok at the fall ECFC conference which is great because I love it! It saves me a ton of paperwork and I can only imagine that it does the same for our administrator.

[GBurns]

Mr. Mapes ....When and where and in what form did the IRS say no to these cards??