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N740 Remark Code: Spending Account Funds Insufficient

N740 means the member's consumer spending account, such as an HSA, FSA, or HRA, did not contain enough funds to cover the member's share of this claim. The remaining patient responsibility should be collected from the patient directly.

Code: N740 (RARC N740)
Status: Active In use since March 1, 2015.
Code set: Remittance Advice Remark Codes (RARC)
Group codes: PR (Patient Responsibility): The amount is the patient's responsibility. The spending account could not cover it, so the patient pays the remaining balance.
Official description: The member's Consumer Spending Account does not contain sufficient funds to cover the member's liability for this claim/service.
X12 Remittance Advice Remark Codes, retrieved September 25, 2026
Last verified: September 24, 2026 against the official X12 list.

What N740 means

Some health plans integrate with the member’s consumer spending account, such as a health savings account, flexible spending account, or health reimbursement arrangement, and try to pay the member’s deductible, coinsurance, or copay from it automatically. N740 tells you that attempt fell short: the account did not have enough money to cover the patient’s share.

The health plan’s own processing is unaffected. N740 only explains why a patient balance remains that you might have expected the account to cover. It usually appears with PR adjustments for CARC 1, 2, or 3, and possibly CARC 187 for any partial account payment.

Common causes

The patient’s account balance was low or already spent for the year.
An FSA or HRA had reached its plan-year limit.
The patient’s account was closed or had lapsed.
The account processor limits which services it will pay automatically.

What to do

Post the account payment, if any, and confirm the remaining patient responsibility.
Send the patient a statement for the balance, explaining that their spending account could not cover it.
Let the patient know they may be able to request reimbursement from their account later, depending on its rules.
Do not resubmit the claim; the health plan’s adjudication is final for this issue.

How to prevent surprises

At check-in, ask patients with spending accounts whether they want to use their account card at the time of service. Collecting the estimated share up front, where your policies allow, reduces balances left after an N740.

Codes that may appear with N740

PR-187 (Consumer Spending Account payments (includes but is not limited to Flexible Spending Account, Health Savings Account, Health Reimbursement Account,…): Shows any amount the consumer spending account did pay, if it covered part of the balance.
PR-1 / PR-2 / PR-3 (Deductible, coinsurance, and co-payment amounts.): The patient cost-sharing that the spending account was expected to cover.

N510 (Alert: A current inquiry shows the member's Consumer Spending Account does not contain sufficient funds to cover the member's liability for this…): An alert version: an inquiry shows insufficient funds, often sent with an estimate rather than a final claim.
N520 (Alert: Payment made from a Consumer Spending Account.): Payment was made from a consumer spending account.
N367 (Alert: The claim information has been forwarded to a Consumer Spending Account processor for review; for example, flexible spending account or…): The claim was forwarded to the spending account processor for review.
N511 (Alert: Information on the availability of Consumer Spending Account funds to cover the member liability on this claim/service is not available at…): Fund availability could not be determined at the time of processing.

N740 FAQ

Can I bill the patient after N740?

Yes, for the amounts reported as patient responsibility. The spending account simply did not have enough money to pay them.

Will the spending account pay later if the patient adds funds?

That depends on the account administrator's rules. Many patients can submit the bill to their account themselves once funds are available.

Is N740 a denial of coverage?

No. The health plan processed the claim normally. N740 only concerns whether the patient's spending account could pay the patient's share.

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