Automatic adjudication (auto-adjudication) was introduced when IRS issued Revenue Ruling 2003-43 (May 6, 2003) supplying guidance on adjudicating Health FSAs and HRA claims when the participant uses an electronic payment card (such as myResourceCard^®) to pay for the expense.

Under this Ruling, expenses falling into three categories can be treated as automatically substantiated—that is, if the expenses are paid by a swipe of the card, no further substantiation or adjudication is required.

Following are these categories:

• If the swipe is for the exact amount of the co-pay required by the patient's major medical plan, no further substantiation is required. For example, the participant swipes the card (at the physician's office) for the exact amount of the co-pay required for an office call.
  
  
• If the swiped amount matches a previously approved expense. For example, the participant swipes a card for a prescription regularly refilled (with the charge and provider the same).
  
  
• If the provider is prompted to enter additional information about the treatment code or type of care, date of service, and charges when the card is swiped.

Other than claims falling within these categories, all claims paid through an electronic payment card must be substantiated and adjudicated.

In This Issue

IRS Updates HSA Regulations
DataPath's Solutions for HSAs
DataPath's 2004 Annual Conference
DataPath's Growing!!!
What is Automatic Adjudication?
OTC Medicine Gain Eligibility under FSAs