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What is Substantiation?

The IRS has established specific guidelines for PFAs which require proof that a purchase is a qualified expense. This process is called substantiation.

Substantiation processes

There are two ways purchases may be substantiated in compliance with IRS requirements:

1. Auto-substantiation

Substantiation may be made automatically through electronic evidence. Examples include the following:

  • Copay matching: Charges that match the dollar amount exactly, or up to five times the dollar amount, for a copay under the employer’s health plan. For example, a $20, $30, or $40 charge at a provider’s office or five times those amounts.
  • Recurring claims: Charges that match the provider and dollar amount exactly for a previously approved and substantiated transaction. For example, a fixed, monthly orthodontia payment.
  • Real-time substantiation: Charges that are verified as eligible expenses by the merchant, service provider, or other third-party vendor. For example, a drug store automatically approving qualified purchases using a verification system; or an exact match with a claims feed from the health plan or pharmacy benefit manager.
    • Claims that process through your Premera plan will attempt to automatically substantiate outstanding payment card swipes on a weekly basis.
    • Payment card swipes may not automatically substantiate, which will result in a request for documentation. For example, dependent claims with a sensitive diagnosis/procedure (such as reproductive health, behavioral health, or other) which involve coordination of benefits between multiple plan policies or Premera claims that are not an exact match to a payment card swipe, may not automatically substantiate.
      • In the case of dependent claims of a sensitive nature, an authorization can be submitted to Premera to allow these claims to streamline to your account and attempt to automatically substantiate a payment card swipe. Please contact Premera customer service for assistance.

2. Manual substantiation

All purchases that do not qualify for auto-substantiation must be manually substantiated with receipts or other documentation. Examples include prescriptions or visits with a healthcare provider where the amount was unable to auto-substantiate.

FAQ regarding documentation or substantiation

Documentation is required for purchases made with PFA funds to determine that those purchases are eligible expenses per Internal Revenue Service (IRS) rules.

If a claim cannot be auto-substantiated (under the guidelines listed in the “Auto-substantiation” section above), you’ll need to submit documentation manually through your PFA provider. This is commonly done online via a website or mobile app.

For specific instructions on how to submit documentation, you’ll need to refer to the policy of your PFA provider.

Itemized receipts are the most common form of documentation, but you’ll need to ensure that all receipts or documentation you submit contains all the required information.

For a full list of required information, please refer to the “Documentation” section above.

Typically, if documentation is still needed to process a claim, your PFA provider will give you a deadline to provide documentation. Documentation that is not provided after 120 days may result in your PFA payment card being suspended until the transactions are substantiated or repaid.

Since not all services from a provider or pharmacy are considered eligible expenses, receipts or other documentation may be required to verify if they are eligible expenses.