Flexible Spending (Flex Spend) Card Payments

Flexible Spending Account (FSA), Health Savings Account (HSA), and Health Reimbursement Arrangement (HRA) cards are also known as flexible spending, flex spend, or flex cards. FSAs, HSAs and HRAs allow employers to provide certain benefits to their employees and take advantage of tax savings permitted by the Internal Revenue Service (IRS) relative to tax deductible medical expenses ("qualified medical expenses"). IRS rules govern what types of purchases are allowed for health savings accounts and require that those purchases are "substantiated" with evidence. 

Qualified expenses

Flex cards are special debit cards. Swiping a flex card automatically withdraws money directly from an employee’s health spending account at the point of sale. While these debit cards look and work like any other, they cannot be used for general purposes. Flex cards must only be used for qualified medical expenses. To ensure that the cards are only used for qualified medical purposes, there must be a way to provide evidence that the transaction is a qualified medical expense. A Merchant Category Code (MCC) designates whether the transaction was run by a healthcare merchant.

Qualified healthcare merchant codes

Merchants assigned to one of the Merchant Category Codes (MCCs) on the following list are considered healthcare merchants providing "qualified medical expense goods and services." Transactions can be approved without any additional data and no additional setup is needed for these merchants to accept flex cards.