Navigating the world of healthcare benefits can be confusing, especially when you’re handed a specialized payment card and expected to understand how to use it properly. Many employees receive either an HRA card or FSA card as part of their benefits package, but few fully understand the differences between these two payment methods and how to maximize their advantages.
These specialized debit cards are designed to simplify paying for healthcare expenses, but they operate under completely different rules and funding structures. Understanding whether you have an HRA debit card or FSA debit card is crucial for managing your healthcare finances effectively and avoiding unexpected out-of-pocket costs.
What is an HRA Card and How Does It Work?
A Health Reimbursement Arrangement (HRA) card is a payment method linked to an employer-funded account that reimburses employees for qualified medical expenses. Unlike an FSA, the HRA is exclusively funded by employers—employees cannot contribute their own money to these accounts. The HRA card provides direct access to these employer-contributed funds, allowing you to pay for eligible healthcare services and products without needing to submit paper claims for reimbursement in most cases.
HRAs come in several types, each with specific rules and limitations. The most common versions include the Qualified Small Employer HRA (QSEHRA) for businesses with fewer than 50 employees, the Individual Coverage HRA (ICHRA) which can be used by employers of any size, and the Excepted Benefit HRA (EBHRA) which offers limited coverage alongside traditional group health plans. According to the IRS Publication 969, HRA funds can be used to pay for qualified medical expenses as defined in Section 213(d) of the Internal Revenue Code, including deductibles, copayments, and services not covered by your health insurance plan.
Key Features of HRA Cards
- Employer-funded only: Employees cannot contribute to HRA accounts
- No use-it-or-lose-it: Funds typically roll over year to year
- Varied eligibility: Employers determine which employees qualify
- Portability limitations: Accounts are usually forfeited when leaving employment
- Tax advantages: Reimbursements are tax-free for qualified expenses
Understanding the FSA Card and Its Benefits
A Flexible Spending Account (FSA) card is linked to an account funded by employee contributions through salary reductions. This FSA card allows you to access these pre-tax dollars to pay for eligible healthcare expenses for you, your spouse, and your dependents. The primary advantage of using an FSA card is the immediate tax savings, as contributions are made before federal income taxes, Social Security taxes, and in most cases, state income taxes are applied.
The FSA card system is designed to simplify the payment process for qualified medical expenses. Instead of paying out-of-pocket and then filing for reimbursement, you can use your FSA card directly at the point of sale at eligible healthcare providers and merchants. However, it’s important to understand that not all medical providers or expenses are automatically approved, and you may occasionally need to provide documentation to verify that your purchase was for a qualified medical expense.
Types of FSA Cards
- Healthcare FSA: For medical, dental, and vision expenses
- Limited Purpose FSA: Restricted to dental and vision expenses only, often paired with HSAs
- Dependent Care FSA: For childcare or dependent adult care expenses
Key Differences Between HRA and FSA Cards
While both HRA FSA card options provide convenient access to healthcare funds, they differ significantly in their funding sources, ownership rules, and portability. Understanding these distinctions will help you make the most of whichever benefit your employer offers and avoid confusion when using your healthcare payment card.
| Feature | HRA Card | FSA Card |
|---|---|---|
| Funding Source | Employer-funded only | Employee-funded through salary reduction |
| Contribution Limits | Determined by employer | $3,200 for 2024 (healthcare FSA) |
| Rollover Rules | Typically rolls over indefinitely | Use-it-or-lose-it (with $610 carryover or grace period options) |
| Portability | Generally not portable when leaving job | Funds forfeited when leaving job (with exceptions) |
| Ownership | Employer-owned account | Employee-controlled funds |
| Eligibility Requirements | Employer determines eligibility | Must elect during open enrollment |
How to Use Your Healthcare Payment Card Effectively
Using your HRA FSA card properly requires understanding both the technical aspects of the payment process and the rules governing eligible expenses. Whether you have an HRA or FSA card, following best practices will help you avoid declined transactions, requests for documentation, and potential tax complications.
Where You Can Use Healthcare Payment Cards
Your healthcare payment card is accepted at a wide range of medical providers and retailers that sell eligible health-related products. Common locations include:
- Doctor’s offices, hospitals, and clinics
- Dental and vision care providers
- Pharmacies and prescription drug providers
- Medical equipment suppliers
- Online retailers with eligible health products
- Some supermarkets and retailers with health sections
Common Eligible Expenses for HRA and FSA Cards
According to Harvard Health Publishing, eligible medical expenses include a wide range of products and services. Both HRA and FSA cards typically cover:
- Doctor visit copays and deductibles
- Prescription medications
- Dental treatments and orthodontia
- Vision care, including glasses and contact lenses
- Mental health services
- Medical devices and supplies
- Over-the-counter medications (with doctor’s prescription for some FSAs)
- Menstrual care products
Documentation and Record-Keeping Requirements
One of the most overlooked aspects of using a healthcare payment card is the documentation requirement. While the card system is designed for convenience, both HRA and FSA administrators may require you to provide substantiation for certain purchases. This means keeping receipts and documentation for all transactions made with your HRA FSA card, even if the payment is initially approved.
The IRS requires that all expenses paid with tax-advantaged accounts be for qualified medical expenses. As such, your plan administrator may periodically request documentation to verify that your purchases meet these requirements. Failure to provide adequate documentation when requested could result in the deactivation of your card or having to repay the funds. The IRS Publication 502 provides a comprehensive list of qualified medical expenses that can serve as a reference for what documentation might be needed.
Example: Personal Experience with Healthcare Payment Cards
My colleague, Jennifer, recently started a new job that provided her with an HRA card. Initially confused about how it differed from the FSA card she had at her previous employer, she made several assumptions that led to complications. She used her HRA FSA card for over-the-counter medications without realizing she needed a prescription for some items under her specific plan. When her administrator requested documentation, she struggled to provide the necessary paperwork, resulting in temporary suspension of her card privileges.
After this experience, Jennifer developed a system for managing her healthcare expenses. She now keeps a dedicated folder—both physical and digital—for all medical receipts and maintains a spreadsheet tracking her HRA card transactions. She also contacts her benefits administrator before making significant medical purchases to confirm eligibility. This proactive approach has helped her maximize her healthcare benefits while avoiding documentation issues and ensuring compliance with her plan’s requirements.
HowTo: Set Up and Manage Your Healthcare Payment Card
Properly setting up and managing your healthcare payment card ensures smooth transactions and compliance with plan rules. Follow these steps to maximize your card’s benefits:
- Activate Your Card: Follow the activation instructions provided with your card, which typically involve calling a toll-free number or visiting a website.
- Register for Online Access: Create an online account with your card provider to track transactions, check balances, and manage your account.
- Understand Your Plan Details: Review your plan documents to understand eligible expenses, documentation requirements, and any spending limits.
- Keep Records: Save receipts and documentation for all transactions, even if not immediately requested.
- Monitor Transactions: Regularly review your account activity to identify any unauthorized charges or errors.
- Know the Rules: Understand what happens to your funds if you change jobs or at the end of the plan year.
Frequently Asked Questions (FAQs)
What should I do if my HRA or FSA card is declined?
If your healthcare payment card is declined, first verify that you have sufficient funds in your account. If funds are available, the decline may be because the merchant or expense isn’t automatically recognized as eligible. In such cases, you may need to pay out-of-pocket and submit a manual reimbursement claim with supporting documentation. Contact your plan administrator for specific guidance on declined transactions.
Can I use my HRA and FSA cards for the same expense?
No, you cannot use both an HRA and FSA card for the same medical expense. This would constitute double-dipping, which is prohibited by IRS regulations. You must choose one account to reimburse each qualified medical expense. However, you can use your HRA for some expenses and your FSA for others, as long as you don’t submit the same expense to both accounts.
What happens to my HRA card balance if I leave my job?
Typically, HRA funds are forfeited when you leave your job, as these are employer-owned accounts. However, some HRAs, particularly those compliant with the 21st Century Cures Act, may offer limited portability options. Check with your employer’s benefits department to understand the specific rules governing your HRA account upon termination of employment.
Are over-the-counter medications eligible with my healthcare payment card?
Since the passage of the CARES Act in 2020, over-the-counter medications and drugs are eligible expenses without a prescription for both HRA and FSA accounts. Menstrual care products also became eligible expenses. However, some specific plan documents might have additional restrictions, so it’s always best to verify with your plan administrator.
Can I use my FSA card for dependents not covered under my health insurance?
Yes, you can use your FSA card to pay for qualified medical expenses for your dependents, even if they aren’t covered under your health insurance plan. The IRS defines dependents broadly for FSA purposes, including children up to age 26 and qualifying relatives whom you provide more than half of their financial support.
What’s the difference between an HRA card and an HSA card?
An HRA card accesses employer-funded Health Reimbursement Arrangement funds, while an HSA card accesses a Health Savings Account that you own and fund (often with employer contributions). HSAs are tied to High-Deductible Health Plans, offer triple tax advantages, and are fully portable. HRAs are employer-owned with varying portability rules.
