How does the IRS know that the distributions from the HSA are used for qualified medical expenses if UMB or the employer is not responsible for substantiation?

The accountholder must keep itemized receipts and Explanation of Benefits (EOBs). This is similar to the way they would keep itemized receipts for charitable donations that they claim as an itemized expense on their personal income tax return. The accountholder is subject to IRS audits, so they should keep the receipts for seven years.