June 10, 2009
Healthcare Spending Account Debit Card News
As you may know, the IRS governs how health FSA debit cards are used at health-care related merchants and merchants who have an Inventory Information Approval System (IIAS) in place.
IIAS is an automated system put in place by a merchant that approves eligible medical expenses at the point of purchase by matching the item's SKU to a list of eligible expenses. Overall, IIAS has been a great success by helping to reduce the substantiation participants need to submit under the IRS guidelines.
Supermarkets and other retailers had a January 1, 2008, deadline to comply with the IRS rule, while traditional drugstores and pharmacies have until June 30, 2009 to comply.
We want to remind everyone of the impact the change will have on pharmacies and drug stores on and after July 1, 2009. After June 30, 2009, health FSA debit cards may not be used at pharmacies or drug stores unless the location has IIAS in place or, the store or pharmacy certifies that on a location-by-location basis, 90% of the pharmacy's gross receipts consist of items that qualify as expenses for medical care under Section 213(d), including non-prescription medications.
Without IIAS or if a pharmacy does not certify it meets the 90% requirement, the debit card will be denied at the point of service.
Please review the most up to date list of IIAS approved merchants by visiting our website.
How will the card work when used at an IIAS approved merchant?
You will swipe your FSA debit card for entire purchase.
FSA Eligible items will be auto substantiated (no additional claim filing required).
The Merchant will ask for another form of payment for non-eligible items.
Pharmacies that take the necessary steps to install this technology now have the ability to identify the items being purchased at the point of sale and will only draw money from your flexible spending account for eligible items. All non-FSA eligible items will need to be purchased via a separate transaction.
Please note that if your pharmacy is not IIAS compliant your debit card will not work there after 7/1/09. Expenses for non-IIAS compliant merchants will need to be submitted via a manual claim for reimbursement.
Should you have any questions about the above information or the impact to your Flexible Spending Account please do not hesitate to contact us at 888-318-7472.