An American Fidelity Benefits Debit Card provides a convenient way to access reimbursement account funds. It’s designed to be quick and removes the need to pay out-of-pocket, but there are important things to know when using the card.

The Internal Revenue Code (IRC) guidelines are strict where tax breaks are made available. In the case of reimbursement accounts, the IRC requires that all expenses be proved eligible – or substantiated. This can happen in two ways:

  1. Automatic adjudication is the ability to electronically and systematically validate an expense that was paid using a Benefits Debit Card. Most commonly, this is through the Inventory Information Approval System (IIAS) that many merchants use. 
  1. If an expense isn’t auto-adjudicated through any of the IRC-endorsed automated processes, a participant must provide documentation to prove the expense is eligible.


Let’s look at what a customer will experience when their expense isn’t auto-adjudicated.

Steps for a benefits debit card authentication

  • Step 1: John uses his card to buy his prescription at a local pharmacy. The transaction goes through and John goes home. 
  • Step 2: Auto-adjudication doesn’t occur, so a request for documentation is mailed 10 days after the swipe. The letter asks John to provide documentation either in the form of an itemized receipt or Explanation of Benefits (EOB.)
  • Step 3: If the request is ignored, a second letter is sent 30 days later.
  • Step 4: Finally, 90 days after the initial purchase, the card is turned off. He can still submit claims without using the card, but the card will not be turned back on until substantiation is provided.

Providing documentation is one of the most common points of frustration for reimbursement account participants. Especially for customers who can relate to “John,” and whose prescription has long been filled. However, the explanation is quite simple – all purchases must be substantiated.


Learn How American Fidelity Follows IRC Guidelines to Keep Customers Compliant

Why do transactions go through if they’re not actually approved?

The Benefits Debit Card works at places where many transactions involve eligible medical expenses. But, many of these locations also sell ineligible items or services, like grocery stores, pharmacies, or a chiropractic office.

At these locations, the card assumes you purchased eligible items. Many times, the information captured contains information on the location and amount approved, but not information on the item itself. This is what initiates the substantiation request. The card works so you can complete the purchase and submit documentation after the claim is approved.


What needs to be included in the documentation to substantiate expenses?

  •        Original date of service or expense
  •        Description of service rendered or expense
  •        Charges for the service or expense
  •        Provider of the service or expense
  •        Recipient of the service or expense


What are the top reasons that transactions require substantiation?

  1. Electronic information supplied through the Benefits Debit Card transaction did not include the details described above.
  2. Purchase was made at a store that is not IIAS compliant. Items at these stores cannot be auto-adjudicated.
  3. Purchase was made for dental or visions services. These services are unlikely to be auto-adjudicated and require an EOB or itemized receipt.


Why do certain items trigger a substantiation request more often than others? 

The location has a greater impact on this than the item being purchased. Locations that provide dental or vision services are the most likely to require substantiation. National pharmacy chains that are IIAS merchants have a lower chance of requiring substantiation. Bottom line: regardless of your purchase location, always submit documentation right away to help keep your card active.


Why doesn’t American Fidelity get the information from the medical provider or stop requiring substantiation?

HIPAA privacy laws and modern security standards don’t allow for the sharing of healthcare details upon request. The request for substantiation is the fastest and most effective way to validate a claim. As the plan provider, we are required to follow Internal Revenue Code (IRC) rules. It’s not an American Fidelity rule, it’s an IRC rule.


What’s the easiest and fastest way to submit substantiation?

The easiest and fastest method is the AFmobile® app, available in the Apple App Store or the Google Play Store. To provide documentation:

  1. Log in to your online account or AFmobile
  2. Select the Additional Documentation button
  3. Select Reimbursement Account(s)
  4. Select the pending transaction and click Add Receipt to upload documentation or to add a picture of the receipt in the AFmobile App.

Learn more about reimbursement at

As a specialist in employee benefits, American Fidelity helps customers keep their benefits program compliant. We follow the Internal Revenue Code (IRC) rules which require all expenses to be substantiated with eligible documentation.

If you have questions about Section 125 Plan compliance or FSA documentation, contact our Section 125 Administration team.