What Are Health Benefit Cards?

The IRS enables employers to offer an employee benefits plan with FSA , HRA and HSA accounts. These programs permit funds to be placed in an account that can be used to pay for health care expenses, such as co-pay amounts, prescriptions, and other eligible medical expenses. Additionally, an employer’s benefit plan administrator may offer a debit card to provide convenient access to FSA/HRA/HSA account funds. So, an FSA/HRA/HSA debit card is what is meant by the term health benefit card.

While plan administrators determine the requirements for how FSA, HRA and HSA debit cards work, SIGIS offers two services that may be helpful to card holders. These are the Store Locator Service and the Eligible Product List Criteria publication.


Cardholders (Cropped)

Store Locator

Eligible Products

The IRS determines what health care services and products are eligible for card holders to purchase with an FSA or HRA card. To help all SIGIS participants, SIGIS determines whether a product qualifies or does not qualify as a medical expense under IRS Code Section 213(d) and applicable IRS guidance.

Card holders may access and download a document that describes the criteria for an eligible product. This document explains health care items that are considered eligible or ineligible for purchases by FSA and HRA card holders. Health care items that are not eligible for purchase include both those that are dual-purpose or ineligible:

Eligible Items

Over-the-counter products that treat a specific medical condition and are primarily for a medical purpose. They include medicines or products that diagnose, alleviate or treat existing or imminent injuries, illnesses or medical conditions. These drugs and products are not cosmetic in nature, or merely beneficial to general health or used for personal hygiene. As a general rule, most of these products are of short-term use, but some do treat chronic medical conditions.


Dual-Purpose Items

These products may have both a medical purpose and a personal hygiene, cosmetic or general health purpose. In order to be considered eligible, they must be used to treat a medical condition and not used to improve or maintain general health unless prescribed by a physician to treat a specific illness, condition or injury. These products may be eligible for reimbursement, but require a letter of medical necessity from a licensed health care professional stating the specific diagnosis or medical condition, the specific over-the-counter medicine recommendation to treat the condition, and documentation of the product and cost. Dual-purpose items will not be included in the SIGIS List, but may be submitted to a plan administrator with the required documentation as noted above. Card holders should contact their plan administrator for more information and the documentation required.

Ineligible Items

Products that are used for general health, cosmetic, or personal hygiene purposes are not reimbursable. Typically, these are not referred to as medicines or drugs and are not recognized to treat a medical condition. Medical expenses that are not reimbursable under IRS Code Section 213(d) of the federal tax code are ineligible. These include food supplements, toiletries, lotions and soaps, shampoos, and most herbal supplements. These items are also not on the SIGIS List.

Click here for the Eligible Product List Criteria publication.


Cardholder FAQs

CARES Act - Eligible Product List Changes

31 Mar, 07:57 AM
On Friday March 27th the Coronavirus Aid, Relief, and Economic Security Act or the CARES Act was signed into law. The bill included a change impacting the use of funds from HSA, HRA and FSA health benefit accounts. The bill reverses the prescription requirement for Over the Counter Drugs for reimbursement and also includes eligibility for menstrual care products.

On Friday March 27th the Coronavirus Aid, Relief, and Economic Security Act or the CARES Act was signed into law.  The bill included a change impacting the use of funds from HSA, HRA and FSA health benefit accounts. The bill reverses the prescription requirement for Over the Counter Drugs for reimbursement and also includes eligibility for menstrual care products.  The bill had a retroactive start date of 1/1/20. While SIGIS cannot affect past transactions, we are making changes as quick as possible for future transactions.


SIGIS initiated this as a top priority early last week even before the signing of the bill.  Our teams and business partners are working to identify changes to the eligibility criteria and the Eligible Product List.  Under a normal monthly review cycle we process an average review of 1,700 items per month.  This month’s submission was on the high end including 3,395 items.  In addition, we are including 19,111 OTC Drugs and Medicines items in our database and doing a full review on 913 items in our Feminine Care categories which include Menstrual Care.  Our goal is to have all of this reviewed and published by our next Eligible Product List date scheduled on 4/15/20.


Upon merchants downloading the updated list with revised statuses, and processing those changes into their point of sale systems, consumers will be able to proceed through normal checkout lanes and use their healthcare benefit debit cards for the purchase of these products.  In addition to processing the list, merchants that have private label items will need to update their internal eligibility flagging of products based on the revised list criteria document.


While the 4/15 list publication will be a significant start, we expect large changes to be published in the following months as merchants and manufacturers submit items not currently in our database for eligibility review.  There will also be merchant responsibility to ensure their systems get updated with the item revisions.


SIGIS and our business partners have the highest priority on this change.  Our work locations are impacted by shelter in place orders, as are many of you.  We expect it will take some time for all the products to be identified and updated in every merchant’s system.  The current pandemic will create additional challenges in making that happen.  Consumer experience will be inconsistent across items and products in the near future but should improve quickly.  It will be important, that consumers, plan administrators, manufacturers, point of sale vendors and merchants work together and provide mutual understanding while this change gets rolled out.


Future communication will be provided as needed.


Plan administrators should contact their card issuer or processor, and merchants should contact their acquirer. Card holders should contact their Plan Administrator. Contact us for membership information.

Generally, yes. The IRS requires that FSA/HRA purchases be substantiated. As the 90% rule does not provide substantiation, plan administrators will apply their standard substantiation processes to transactions at these locations. The customer may be asked to submit a sales receipt to document that the items being purchased were Rx/prescriptions or Eligible Health Care Products. In some cases the plan administrator may be able to match a transaction amount with other data such as Pharmacy Benefit Management (PBM) co-pay on prescriptions to complete substantiation and not require the customer to submit a sales receipt. But in the absence of an automated matching program like this, it is likely that customers using an FSA/HRA card will be asked by their plan administrator to submit a sales receipt.

While an IIAS system is required for non-health care merchants to accept FSA and HRA cards under the IRS guidelines, a merchant that implements an IIAS solution is not guaranteed 100% acceptance of all FSA/HRA cards. SIGIS Member card issuers/processor and the majority of their third-party plan administrator clients supporting FSA and HRA cards have enabled SIGIS IIAS processing to authorize and auto-substantiate transactions; however some employer benefit plans may require a level of transaction detail that is not supported with an IIAS solution, thereby, preventing acceptance even at merchants with a fully certified IIAS solution. To maximize authorization rates, merchants should support partial authorization, RX amount and non-eligible items when implementing an IIAS. In addition, normal decline issues can occur for expired cards, insufficient funds, cards not activated and other business reasons.

Consumers contact their plan administrator to ask questions about merchants at which their FSA/HRA card will work. Only plan administrators can answer these questions. Plan administrators should research cardholder questions via their transaction processing systems to determine what may have caused a cardholder's problem. If the plan administrator believes that SIGIS 90% Rule merchant information may not be accurate, they should contact their card issuer processor for assistance.

SIGIS has two merchant lists: first, the SIGIS IIAS Merchant List for merchants that are SIGIS-certified to process IIAS transactions, and second, the SIGIS 90% Rule Merchant List for merchants that have registered with SIGIS as meeting the IRS requirement as a store with 90% or more of gross sales from Rx/prescription and qualified medical products.

While a majority of plan administrators permit FSA/HRA cards to be used at 90% Rule merchants, there may be some that do not or whose employer clients do not permit it. This could mean that plan administrators in a merchant's market area may have elected not to authorize FSA/HRA card transactions at 90% Rule merchants.

US Territories US Virgin Islands (USVI), Guam, Marianas Islands / Saipan (CNMI) and American Samoa operate under a variety of US tax laws.  Some mirror the US tax law while others are separate and distinct.  In summary:

  • US Virgin Islands (USVI) and Guam operate under a mirrored US tax law that supports Section 125 Cafeteria plans and an IIAS.  SIGIS supports retailers and consumers in these markets via IIAS and 90% Rule programs.
  • Puerto Rico has its own tax code that does not currently recognize Section 125 Cafeteria plans and IIAS.  SIGIS does not support this market.
  • American Samoa and Marianas Islands / Saipan (CNMI) have a combination of US and Local tax laws in effect.  Further research is required to determine if Section 125 applies in these markets and the impact of local tax laws. At this time, SIGIS does not support these markets.

While SIGIS processes may support these locations members and consumers should consult with their counsel and plan administrators that operate in these markets to determine support for FSA, HRA and HSA debit cards.

As of April 12th, 2011.