The IRS requires all pre-tax transactions to be verified with a receipt, except if:
- The transaction includes only IIAS-eligible items (FSA, HSA)
- For example, purchases at a pharmacy may require a receipt because this merchant sells both eligible and ineligible items. If the merchant provides an IIAS information, it will auto-substantiate the healthcare eligible amount, so the transaction will not require further receipt for manual substantiation.
- Forma also recognizes some merchants who only provide eligible items and services based on their merchant code and name, such as Ambulance services, Hospitals, Public Transportation (for commuter), so the transactions will not require receipt substantiation
- The amount matches a defined copay amount (FSA, LPFSA, HSA)
- It’s a recurring expense
How does IIAS work?
Big box retailers and pharmacies like Walmart or CVS are not considered eligible because they sell both eligible and ineligible products and services. If the check-out stations at these stores have IIAS systems enabled and only pre-tax eligible items are included in the transaction, it will be approved with no receipt required.
How do copays work?
When a transaction made at an eligible merchant matches a preset copay amount or matches a combination of copay amounts, it will be approved with no receipt required. Copay amounts are defined in Forma by your employer based on the pre-tax plan structure.
How does recurring expenses work?
Recurring expenses are transactions that are processed at the same merchant for the same amount. When a transaction is made with your Pre-tax Forma Card for a recurring expense, it will only need to be verified once. This means that you may be asked for a receipt following the initial transaction, but would not have to submit receipts for subsequent ones.
What are the next steps when a receipt is required?
For instructions on how to upload a receipt, see How do I upload receipts for my card transactions?
To review the timeline when a receipt is required, see What is the receipt required notification timeline?
Once you submit the receipt and it is reviewed by Forma's claims team, any ineligible items will create a balance due on your account. For more information about this, see What is a balance due and how to offset it?
Over 90% of transactions are automatically substantiated based on merchant information, IIAS details, co-pay matching, and recurring expenses. However, Forma highly recommends keeping all receipts for record-keeping or future audit purposes.