The Advantages of Offering Payment Cards: Employees and Employers

How many cards do people carry around in their purses, wallets, or car console? Most people like to have their cards on hand when they need them. Grocery store card, health insurance card, library card, debit card, credit card—no matter how little or how much they’re used, people want to be ready.

What about health care payment cards? With a health care payment card, users can easily access funds from health savings accounts (HSAs), flexible spending accounts (FSAs), or health reimbursement arrangements (HRAs) without having to pay out-of-pocket and seek reimbursement later. It’s similar to a debit card, as it’s a fast and convenient way to pay for medical expenses. It’s helpful to keep receipts in case they’re needed, but with this simple way to use funds, members can streamline the entire process. The more people have it on hand, the more they will use it to pay for qualified items and services.

Refresher: How do health care payment cards work?

When participants use their payment card to access account funds, many of these transactions are automatically substantiated as qualified medical expenses without requiring the participant to submit supporting documentation. Participants simply provide a card to a qualified merchant or provider, and they will swipe the card like any other credit or debit card to pay for a purchase. Funds for eligible expenses will be transferred directly to the provider or merchant from the health account. It’s helpful to ask for a receipt in case it is required for substantiation.

The Pros of Payment Cards for Employees

With a payment card that is designated for health care spending, members can easily access funds, cover eligible expenses, and avoid the process of seeking reimbursement after the fact. Let’s look at some scenarios where members can benefit from using their health care benefit account payment cards:

Doctor’s office: Matt is at work, and he gets a call from his child’s school that she has a fever, and he needs to come and immediately get her. With a health care payment card, Matt can take her directly to the doctor’s office and use it to pay for the visit while he’s there. (Result: chicken soup and she’s fine before bedtime. One less receipt to worry about.)
Pharmacy: Picking up some prescriptions on the way home? When Kate’s health care payment card is in her car, she can take the funds right out of her account. And while she’s at the pharmacy, she can grab a pain reliever for her headache and SPF 30 sunscreen for her upcoming weekend away—all covered as eligible expenses. (Result: Those chores are done, and paid for!)
Bill paying: Mary had a few diagnostic tests at her doctor’s office a couple weeks ago, and just got the bill through the provider’s online portal. She uses the card to pay the provider online, and saves the card in the portal to use for future services. (Result: No paying by snail mail and searching for a checkbook to pay the bill…or even needing to own a checkbook.)

Payment card holders will be in good company. In the 2019 Visa Annual Health care Research Report, payment card holders made up 82 percent of FSA users and 62 percent of HSA users. Plus, cards are only growing in popularity. A 2020 report from MedData said that 68 percent of consumers prefer electronic payment methods. The convenience factor of health care payment cards fits many personal situations, payment practices, and lives.

What information is required for the IRS on a receipt?

If you are saving a receipt for reimbursement, be sure it has the following details included:

Date of service

Type of service

Name of provider and name of individual serviced

Cost of item or service

Health Care Payment Card Advantages for Employers

Employees with health care payment cards aren’t the only ones who benefit, so let’s look at what’s in it for employers.

First of all, health care payment cards can be tailored to specifically support programs that fit each workplace. Employers have the option of multiple cards for different programs, or putting all of them on one single card (in some cases, depending on the benefits provider). Since health care is a giant perk for employees, being able to easily use it makes everyone happier…and when everyone’s happy, it’s a better and more productive work environment.

Health care payment cards also allow employers to use selective authorization to meet IRS guidelines for what constitutes a qualified item or service. As a result, there’s less chance of conflict about whether or not a fee should be covered. It’s even possible to apply a Merchant Category Code to HSA, FSA, or HRA cards.

In many cases, health care payment card purchases can also be auto-substantiated. For instance, transactions that should not require receipts include:

• Copayments that match a group health insurance plan

• Copayments that match a group pharmacy benefit

• Recurring expenses of the same dollar amount and same location that have been previously substantiated

• Purchases made at certain supermarkets, grocery stores, department stores, and wholesale clubs that automatically provide substantiation through an inventory control system

By making these automatically work, the entire process is simplified.

According to a survey of 2,000 consumers on their health care payment experiences, 54 percent of patients are interested in monitoring their upcoming provider payments digitally, and 43 percent would like to automate payments. Employers offering this health care payment card service can give employees peace of mind, because there’s one less issue to worry about.

That’s it – employees can make sure they have their card with them, and employers can ensure they know how to use it. Together, the health care payment card will make paying for items and services a smoother process for everyone.

Want to know more about payment cards? Visit our payment resource page for more information or to speak with one of our experts about setting up or using a payment card.

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