Have you ever wondered why the Plan requires all HRA submissions to be substantiated by an explanation of benefits?

There are two answers to this conundrum. The first is the Internal Revenue Service. They require all account holders to verify the eligibility of any HRA reimbursement for goods or services by submitting detailed documentation in the form of an explanation of benefits or complete receipts.

Simple, right? Not so fast.

When a receipt is not a receipt


People often forget (or just aren’t aware) that if used correctly, the HRA credit is a form of a tax-free benefit for the participant. Because this benefit can be tax-free, the Internal Revenue Service (IRS) is involved. Actually, it is IRS that dictates the rules and provisions for the proper administration and utilization of this benefit. One such rule of theirs is that any receipt submitted for an eligible HRA expense must show:

1. The date of service.
2. The name of the patient.
3. An itemized listing of the services rendered, or the goods purchased so as to prove that the use of these monies were for an eligible expense as described within IRS publication 502, and,
4. The amount that the participant owes for those services or purchase AFTER insurance and other discounts have been applied.

The other reason – and by far the most confusing for participants – is that no two medical receipts are created alike. Quite often they do not contain one or more of the aforementioned required pieces of information or the receipt is simply not comprehensive enough.

Sadly, 71% of all receipts submitted to the Plan for reimbursement fail to meet the Internal Revenue Service’s receipt criteria. Sadder still, is the realization that your doctor and/or dentist are giving you receipts that do not meet the IRS requirements listed prior. Conversely, this also means that Fund resources are wasted trying to adjudicate 71% of all HRA reimbursement requests that are not documented by an explanation of benefits.

The Good News

The Fund has simplified the documentation process by only accepting an explanation of benefits for medical and dental HRA reimbursement submissions. Why did we do that? Because the Fund’s explanation of benefits meets all four of the Internal Revenue Service’s criteria for substantiation AND they are available 24/7 and effortlessly downloadable from the Create portal. (Easy-peazy, right?) Let’s also not forget that the Fund has limited resources and the processing of submissions with incomplete or incorrect documentation unnecessarily depletes them.

More Good News

You can use the time that it used to take you to “Frankenstein’ your medical receipts to meet the Internal Revenue Service’s criteria and direct that to more productive endeavors. (Looking for suggestions? How about decoupage? Reading past Fund newsletters, or attending a monthly membership meeting? BAM! I went there.)

One more thing

OK, so: you noticed that we only covered how medical and dental HRA submissions are to be substantiated, right? Well, you also need to know what kind of supporting documentation is needed for pharmaceutical and vision HRA reimbursement submissions. Unlike their medical and dental counterparts, pharmaceutical and vision reimbursement requests can be substantiated by submitting detailed receipts.