FSA debit card

Traditionally, to meet Internal Revenue Service (IRS) substantiation requirements, FSAs were accessed only through claims for reimbursement after incurring (and usually paying) an out-of-pocket expense, often after deductions were already made from the employee's paycheck to fund the FSA.

Unlike FSAs and HRAs, HSAs do not require substantiation prior to withdrawal; users need only retain their receipts with their tax papers.

However, since most HSA providers came from FSA and HRA backgrounds, most offer substantiation services for HSAs that are similar to those for FSAs and HRAs.

FSAs enable employees to utilize pre-tax dollars and save Federal, FICA, and, in most cases, state taxes when paying for eligible expenses not covered by traditional insurance plans.

The process of obtaining receipts or recoupment when auto-adjudication is not possible is known as "pay and chase", a term the IRS also used in its most recent ruling (Notice 2007-02).

This may be done through such means as including details of the transaction with the charge (Ruling 2003-43) or forwarding the health plan's explanation of benefits to the FSA or HRA provider for further processing (Notice 2006-69).