What happens if the employee uses the debit card for non-medical purchases?
• For any items purchased, which are not considered to be automatically substantiated, there is a sequential procedure to be followed as outlined in Revenue Ruling 2003-43: If substantiation is not accepted as a medical or prescribed preventive allowable, then the following will be done: • The employee pays back the improper amount to the Plan (employer). • The employer withholds the amount of improper payment from the employee’s wages or other compensation (possibly from a bonus paid to the employee). • The employer offsets the improper payment against future claims for reimbursement – i.e. the debit card gets charged at the next payroll and the improper amount is then taken off of the card and given back to the Plan (employer). • If none of the above actions are successful or are otherwise unavailable, the employee remains indebted to the employer for the improper amount and the employer treats it as it would any other business indebtedness (the employer could write it off as a bad d
