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 FAQ
SIGIS FAQ
FAQ for TPAs
FAQ for Merchants
SIGIS FAQ
- What is the Special Interest Group for IIAS Standards?
- What is an “inventory information approval system” as specified by the IRS?
- What is different about the SIGIS standard than approaches implemented by some retailers?
- When will merchants be ready to meet the IRS IIAS requirements?
- If I implement the SIGIS IIAS, am I guaranteed 100% acceptance of the healthcare debit cards in the market?
- Will the IIAS group assist retailers in determining which items are Section 213(d) eligible medical expenses?
- How will the Eligible Product List be developed?
- Is it required that I download the product list?
- How often is the product list updated?
- Why are some items that we (the merchant) have identified as healthcare not represented on the list?
- What's happening to meet the data retention requirement?
- What certification will be required to support the IIAS standard published by SIGIS?
- Who is eligible to participate in SIGIS?
- Has the IRS approved the SIGIS approach?
- I implemented my IIAS system, Why are card transactions declining?
- What is the impact of supporting or not support the Rx Amount?
- How can we get more information?
What is the Special Interest Group for IIAS Standards?
A group of companies involved in supporting Flexible Spending Account (FSA) and Health Reimbursement Arrangement (HRA) debit card transactions formed a working group called the "IIAS Standards Interest Group" to establish a voluntary industry standard to meet IRS requirements for operating an IIAS by the mandated deadline of January 1, 2008. The working group has now incorporated as the Special Interest Group for IIAS Standards (SIGIS) to manage the standards on an on-going basis.
SIGIS is composed of a broad range of participants, including retailers, card issuers, third party plan administrators ("TPAs"), merchant acquirers, processors, financial institutions, trade association groups, software vendors, and payment card networks.
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What is an “inventory information approval system” as specified by the IRS?
The retailer's point of sale system identifies eligible healthcare FSA/HRA purchases by comparing the inventory control information (e.g., UPC or SKU number) for the items being purchased, against a pre-established list of eligible medical expenses. The list is restricted to "eligible medical expenses" as described in Section 213(d) of the Internal Revenue Code (including eligible non-prescription items). The eligible medical expenses are totaled and sent to the payment card issuer's system which approves the payment subject to coverage under the health plan (i.e., type of coverage provided, covered participant, etc).
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What is different about the SIGIS standard than approaches implemented by some retailers?
A retailer may develop its own approach that is compliant with IRS requirements for an IIAS, and then make separate contractual arrangements with individual TPAs or card issuer processors. With the IIAS standard developed by SIGIS, a broad range of participating retailers will be able to implement a solution that is recognized industry-wide, which will enable acceptance of all FSA/HRA payment cards. Likewise, TPAs will implement a common set of procedures that applies to IIAS transactions at participating retailers.
Additional values that were not previously provided will be added to the authorization message, allowing administrators greater flexibility in debit card plan design than had been available before, including support for HSA and restricted-HRA plan designs.
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When will merchants be ready to meet the IRS IIAS requirements?
MasterCard and Visa have published technical requirements in support of the standard published by the Special Interest Group for IIAS Standards. As a result, in October 2007, FSA/HRA card issuers and processors were able to support the processing of real-time or automatic substantiation of the amount of eligible medical expenses in a cardholder's purchase. A current list of retailers who have implemented or plan to implement an IIAS using the standard developed by SIGIS is available at www.sig-is.org
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If I implement the SIGIS IIAS, am I guaranteed 100% acceptance of the healthcare debit cards in the market?
While an IIAS system is required to accept FSA and HRA cards under the IRS guidelines, having a solution will not guarantee 100% acceptance of cards. SIGIS member lssuer/Processors and the majority of their TPA 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 accounted for with an IIAS solution, thereby preventing acceptance even at merchants with a fully certified IIAS solution.
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Will the IIAS group assist retailers in determining which items are Section 213(d) eligible medical expenses?
Yes. SIGIS publishes an industry Eligible Product List for participating retailers to use as the basis to identify items in their inventory. Access to the Eligible Product List is available upon SIGIS membership approval. The Eligible Product List also enables plan administrators and third-party administrators (TPAs) to rely upon a more consistent identification of eligible medical items.
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How will the Eligible Product List be developed?
SIGIS will contract with a company experienced in list management and development, and will rely on a committee of plan administrators, retailers and other SIGIS members to review the list.
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Is it required that I download the product list?
One of the critical issues in supporting an IIAS solution for employer benefit plans and the third party administrators (TPAs) that support these programs is assurance that the items being approved through the IIAS solution meet the health care eligibility standards established by the IRS as defined in IRS Code Section 213 rules. SIGIS has established a relationship with a third party to provide a standardized list of eligible health care related items. While the IRS does not mandate the use of the SIGIS Health Card Eligible list, merchants supporting a SIGIS IIAS solution must use the SIGIS provided Eligible Product List for Nationally branded items. In addition, merchants may also flag private label and local market items as defined in the SIGIS Private Label Eligibility Criteria standards.
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How often is the product list updated?
The SIGIS Eligible Product List is updated monthly. Updates are generally available for download and use by the 9th business day of each month.
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Why are some items that we (the merchant) have identified as healthcare not represented on the list?
The source of the list includes most nationally-distributed, regular-stock items. As such, the following types of items will generally not be included: items specially created for an individual retailer (including but not limited to private label items); a local, regional, or specialty item; bonus items (e.g. 2 oz free); BOGOS (buy one, get one), or other in-and-out types of packaging with limited availability or distribution. Although these items will not be included in the data, they may in fact be eligible.
Because the source of the list is nationally-distributed, regularly-stocked products, private label/store brands will generally not be available for inclusion on the standard list produced by SIGIS. It is understood that some of these private label/store brand items are, in fact, eligible under IRS Code Section 213(d), and therefore, can be processed through the SIGIS IIAS. Merchants that choose to supplement their inventory of SIGIS identified eligible items with their own private label items are free to do so by following the process detailed in the Private Label Eligibility Criteria document. That document can be found at www.sig-is.org.
Additionally, dual-purpose items are not included as part of the standard list. These products may have both a medical purpose and a personal/cosmetic or general health purpose. Examples of dual use items that would not be included:
- Baby Formulas/Nutritionals
- Dietary Supplements
- Vitamins
The current Eligible Products Criteria document may be found on the SIGIS website at www.sig-is.org.
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What's happening to meet the data retention requirement?
SIGIS has developed data retention requirements and is working through approaches to most cost effectively support both data retrieval requests and responses to enable plan administrators to meet IRS audit requests. More information will be published in 2008.
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What certification will be required to support the IIAS standard published by SIGIS?
Retailers who elect to implement an IIAS using the standard published by SIGIS must first be certified by SIGIS. Certification requires completion of an IIAS Self Assessment Questionnaire, a technical processing certification, use of the industry eligible items list, and arrangements to support transaction data retention/retrieval. A retailer's acquirer will review the questionnaire and submit it to SIGIS for approval. A retailer will not be permitted to claim that it supports IIAS transactions using the published standard until it has been certified to the IIAS Standards developed and approved by SIGIS.
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Who is eligible to participate in SIGIS?
The group is open to all participants involved in offering, processing or accepting healthcare payment cards for FSAs and HRAs. Thus, membership is open to retailers, card issuers, third party plan administrators, merchant acquirers, processors, financial institutions, trade association groups, and payment card associations.
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Has the IRS approved the SIGIS approach?
Although there is not currently a mechanism for formal IRS approval, SIGIS and its members have met with IRS and Treasury representatives over the course of the last two years to review the planned approach. In the most recent meeting this summer, the approach was vetted and comments were favorable.
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I implemented my IIAS system, Why are card transactions declining?
Merchants who have implemented IIAS systems continue to see declines on healthcare benefit cards. While there have been some isolated issues, both at merchants and at issuer processors, in the initial implementation of IIAS, the vast majority of transactions are working as intended. That is to say, if the card transaction declines, it is most likely that the decline is valid.
MOST FREQUENT VALID REASONS FOR CARD DECLINE. This list includes the main reasons why properly formatted IIAS transactions at an IIAS merchant can validly decline against cards that are IIAS enabled1. This is not intended to be an all-inclusive list, but represents the most common reasons that together account for most declines.
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What is the impact of supporting or not support the Rx Amount?
The majority of the healthcare debit cards in the market today allow for the purchase of all qualified healthcare items found on the SIGIS Eligible Product List, however there are a limited number of benefit plans that are designed to only reimburse Rx/Prescriptions. The impact of not supporting the Rx/Prescription Amount would mean denied transactions from those employer benefit plans. While these cards represent a minority of the FSA/HRA in the market today, a retailer could limit the customers that can use their cards by not support the Rx/Prescription Amount in the authorization.
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How can we get more information?
Plan administrators should contact their card issuer or processor, and merchants should contact their acquirer. Contact us for membership information.
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