ELIGIBLE EXPENSE SUBSTANTIATION:
What is it and why is it important to me?
What is substantiation?
The process of verifying that a purchase is for an
eligible expense is known as
substantiation.
Substantiation is extremely important, because failure to properly substantiate all reimbursements places you in violation of
Federal law and creates negative tax consequences for you. It can also cause your employer’s plan to no longer qualify as a
pretax benefit. As your claims administrator, UMR will assist you in substantiating purchases made with your card.
How are expenses substantiated?
UMR’s claims system is designed to automatically recognize these expenses and determine if they are eligible or ineligible. This
is called “auto-substantiation.” There are four methods of auto-substantiation that the IRS endorses. They are:
Inventory Information Approval System (IIAS) This is an electronic system that many merchants have built into their databases.
If the merchant you purchase from (such as a grocery, discount store or pharmacy) uses the IIAS system, eligible purchases are
auto-substantiated.
Co-pay logic When you use your card, the system will match the purchase amount to your co-payment amounts, which were
supplied by your employer.
Recurring expense logic When an expense is unable to be auto-substantiated and you provide
acceptable documentation, future identical expenses will auto-substantiate for the remainder of the plan year. An example
would be an orthodontist where you may pay a recurring amount each time you have an appointment.
Data file feeds In this method, the debit card system will match your transaction to patient responsibility amounts (minus any
ineligible amounts). The patient responsibility is “fed” to the system through data files. A successful match is auto-substantiated.
What happens when an expense does not auto-substantiate?
If you incur a card transaction that does not auto-substantiate in our system, it will automatically
trigger a request letter asking you for proper documentation. If you receive such a request, please
respond as soon as possible! The options you have for resolving/submitting the request will be included
in the request letter.
What happens when documentation is not received?
If documentation is not received or submitted documentation contains information that clearly
shows the transaction is not an eligible expense (per the federal tax codes), card access to the
account will be suspended. The IRS requires all expenses to have appropriate documentation as
proof that the purchase was for a qualified expense and incurred within your coverage period, as
defined by your employer’s plan document.
Frequently asked questions:
The following questions are ones we commonly receive when we ask members for documentation.
Remember, we only request this information so that we can attempt to substantiate an expense
that didn’t auto-substantiate.
Q: Why do I have to provide documentation to UMR for card transactions?
A:For some reason your expense did not auto-substantiate, and we need information about the expense to investigate its eligibility.
Q: Why do I have to send documentation for an expense when I have coverage through UMR?
A:There are a few reasons for this. Most commonly are:
If a provider asks for payment upfront, they usually estimate your financial responsibility and “swipe” it on your debit card.
When UMR processes the claim and the responsibility is different from the amount swiped, our system cannot substantiate the
amount – because the two don’t match. This happens a lot with dental and vision providers.
Sometimes you may receive a “balance due” bill from a provider. You can write your debit card number on the bill and return it
to pay it. Usually, the amount on a bill like this is for multiple dates of service or a total family balance due. Our system doesn’t
know that the “total” payment is for more than one visit or service, and it can’t match the amount paid with the amount you are
responsible for. Therefore, the payment will not auto-substantiate.
When you use your card for a payment, UMR’s system automatically
scans your claims to find and match the service/product with the payment. If it can’t find a match, the claim will hold while
the system waits for the next month’s data to be loaded. If the provider does not file the claim in a timely manner, our
system cannot find a match; the amount cannot auto-substantiate.
Q: What are some other scenarios in which a card transaction will not auto-substantiate?
A:If you choose to have insurance coverage under your spouse’s health plan and opt out of your employer’s plan, your card
transactions will seldom auto-substantiate. The auto-substantiation processes are tailored to your employer’s insurance benefits,
since they provide your HRA plan.
If you use the card to pay for services for someone who is not covered under your insurance, the transaction cannot autosubstantiate.
