Restricted-purpose funds carry strict rules about where their dollars can go. HSAs, FSAs, and assistance benefits all limit spending to qualifying categories, and every out-of-bounds transaction creates a problem you have to fix later. That means compliance exposure, manual substantiation, and administrative cost that climbs as your program grows.
The fix is to enforce eligibility at the moment of the transaction, not weeks after it settles. Real-time, category-level spend controls approve qualifying purchases and block the rest before money moves. For teams deciding how to administer these programs at scale, the right platform partner turns enforcement from a cleanup job into an automatic one — and lowers the cost of managing benefits along the way.
Key takeaways
Restricted-purpose funds fail expensively when rules are enforced after the fact. Improper spend, clawbacks, and manual substantiation all add cost and risk.
Real-time controls decide at authorization. Category-level rules approve eligible purchases and decline everything else in the moment, so bad transactions never post — which means less reconciliation, less receipt-chasing, and lower cost per account.
Configurability is what makes it scale. HSA, FSA, and assistance programs each need their own rule sets, and one platform should apply the right rules to every card.
Why are restricted-purpose funds so hard to administer?
The core problem is simple. These dollars aren't general-purpose money. They're earmarked for specific uses under specific rules, and someone has to make sure every purchase stays inside the lines.
Take the numbers on just one program type. HSAs held nearly $174 billion across 41.7 million accounts at year-end 2025, according to Devenir, with total assets up 19% year over year. Employer-affiliated accounts made up 61% of all HSAs and 65% of total assets. FSAs and employer assistance funds add millions more accounts on top of that. Every one of those cards can be swiped anywhere — unless something stops it
The rules themselves are highly specific. The IRS limits FSA and HRA card use to merchants with health-care merchant category codes (MCCs), like physicians, dentists, and hospitals. At other merchants, cards can only work through an approved system that checks each item against eligibility rules under IRS Code Section 213(d). And even when a transaction clears, the IRS requires it to be substantiated — proven to be a qualified expense.
Assistance funds add their own version of the same challenge. Employer hardship programs, wellness stipends, and government-linked benefits each restrict spending to approved categories, like groceries, utilities, medical care, transportation. The rules differ from HSA and FSA rules, but the enforcement problem is identical: dollars meant for one purpose can be spent on another unless the platform stops it.
When enforcement happens after the fact, all of that becomes manual work. An administrator reviews flagged transactions, requests receipts, tracks down cardholders, and reverses or recoups anything that shouldn't have gone through. Multiply that by thousands of accounts and the cost adds up fast. Worse, every improper transaction that slips through is a potential compliance issue.
What do real-time, category-level spend controls actually do?
Real-time spend controls move the decision to the only place it can't be gamed: the authorization request. When a cardholder swipes, the transaction pauses for a fraction of a second while the platform checks it against the program's rules. If the merchant category and the purchase qualify, it's approved. If not, it's declined on the spot.
Category-level control is what makes this precise. Instead of a blunt on/off switch, you set rules by merchant category, spend type, and eligibility criteria. A pharmacy purchase of a qualifying item goes through. A non-eligible item at the same register doesn't. An assistance fund meant for groceries and utilities approves those categories and blocks the rest. The rules do the work automatically, without having to rely on human monitors.
This is the difference between a rule that's written down and a rule that's enforced. After-the-fact review catches problems once they've already happened. Real-time control keeps them from happening at all. Non-compliant spend never posts, so there's nothing to claw back, no receipt to chase, and no exception to reconcile.
And for dual-purpose items — products with both a medical and a general use — the platform can approve the clearly eligible and route the rest to your standard substantiation process, so you're only handling the genuine edge cases instead of every transaction.
How does real-time enforcement reduce admin burden and cost?
The business case comes down to what you as an issuer no longer have to do.
When eligibility is enforced at authorization, the flow of improper transactions mostly stops. That removes the biggest source of manual work in benefits administration: reviewing, substantiating, and correcting spend that shouldn't have happened. Your team spends less time on exceptions and more time on the program itself.
The cost savings show up in a few places.
Reconciliation shrinks because there are fewer mismatches to resolve. Substantiation lightens because auto-approved eligible transactions can be documented automatically rather than one receipt at a time. Compliance risk drops because the record shows enforcement built into every transaction, not applied afterward. And cardholder support eases, because people get clear, immediate answers at the point of sale instead of confusing reversals later.
There's a growth angle too. Lower cost per account means you can administer more programs, and more accounts, without adding headcount at the same rate. Spend controls aren't only a way to prevent loss — they're what lets a benefits program scale profitably. That's the outcome teams are really buying: not just fewer errors, but a lower cost of managing benefits overall.
What to look for in a platform partner
This is where the platform partner matters. SoFi Tech Solutions builds the payment and banking infrastructure behind card programs, including the real-time controls that make restricted-purpose funds work at scale.
Our employee benefit payment solutions put eligibility enforcement where it belongs — in the authorization stream. Category-level rules are configurable, so you define what qualifies for each program and the platform applies it to every transaction automatically. HSA, FSA, and assistance funds each get their own rule sets on the same card issuing and payment processing infrastructure, so you're not stitching together separate systems for separate programs.
Configurability is the point. No two benefit programs enforce the same rules, and a platform that can't adapt forces you to work around it. Ours is built to be shaped to your program, not the other way around. With 20+ years powering payment and banking programs for fintechs, financial institutions, and established brands, we've built the controls, reporting, and reliability these programs demand.
The result is enforcement you can trust and an administrative load you can actually manage. Qualifying purchases clear without friction. Non-compliant ones don't post. And the cost of running the program goes down instead of up as you grow.
Ready to lower the cost and risk of administering restricted-purpose funds?
Drop us a line to discuss how real-time spend controls could work for your benefit programs.
Frequently asked questions
They're the payment infrastructure that issues benefit cards and controls how their funds can be spent. Strong solutions enforce eligibility in real time — approving qualifying purchases and declining non-compliant ones at authorization — so restricted-purpose dollars stay compliant without manual review after the fact.
A good flexible spending account payment infrastructure checks each transaction against IRS rules the instant a card is used. It confirms the merchant category is eligible and, at general merchants, verifies items against an approved eligibility list. Qualifying transactions clear and auto-substantiate; the rest are blocked before they post.
An HSA card issuing platform should issue physical and virtual cards, apply category-level spend controls in real time, and support the reporting and substantiation these accounts require. With HSAs now holding nearly $174 billion across 41.7 million accounts, enforcement and scale both matter — the platform has to handle high volume without letting improper spend through.
Yes. Most benefits admin cost comes from handling transactions that shouldn't have happened — reviewing them, requesting receipts, and reversing improper spend. When eligibility is enforced at authorization, that flow mostly stops. Fewer exceptions mean less reconciliation, lighter substantiation, and a lower cost per account as you scale.
It should. Each program has its own rules, so the platform needs configurable, category-level controls that apply the right rule set to the right card. Running them on one infrastructure — rather than separate systems — is what keeps administration manageable as you add programs and accounts.
Flagging catches problems after the money has already moved, which creates clawbacks, receipt requests, and compliance questions. Blocking prevents the transaction from posting at all. There's nothing to recover and nothing to reconcile — the rule is enforced in the moment instead of cleaned up afterward.
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