Employers are required to substantiate all employee FSA expenses in accordance with IRS rules and regulations. Substantiation ensures that FSA funds are used only for eligible medical expenses, maintaining compliance and protecting both the employer and employees.
Proper substantiation involves verifying that each FSA transaction is supported by valid documentation, such as an itemized receipt or Explanation of Benefits (EOB), that confirms the date of service, provider, patient name, description of service, and amount charged.
Understanding these substantiation and documentation requirements helps ensure claims are approved accurately, and reimbursements are processed efficiently.
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