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 FAQ for Third Party Administrators (TPAs)
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. The SIGIS association 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 The SIGIS association, 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 the SIGIS association is
available at www.sig-is.org.
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Who is eligible to participate in the SIGIS association?
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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Where can TPAs find a list of certified merchants?
The SIGIS association maintains a list of member merchants who have submitted their certification
materials and self-assessment forms to the SIGIS association. You may view that list on the SIGIS
website at www.sig-is.org . The list displays those merchants that are
currently certified and those that are in the process of obtaining their certification.
This list is for informational purposes, TPA's and their authorization partners should rely on the data transmitted in the authorization request by the merchant for transaction authorization.
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How often is the merchant list updated?
The IIAS Merchant List is updated daily as updates are available. The 90% Merchant List is updated each Monday morning.
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Will the IIAS group assist retailers in determining which items are Section 213(d)
eligible medical expenses?
Yes. The SIGIS association 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 contracts with a company experienced in list management and
development, and relies on a committee of plan administrators, retailers and other SIGIS members
to review the list.
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At times, we see that cards may work at some stores of a certified merchant,
but not at other store locations. What could cause that?
It is possible that the merchant has a phased implementation of the IIAS. If the
merchant's implementation date is listed as "Live" and you continue to experience problems with
card usage, please speak with your transaction processor.
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If a merchant implements IIAS, is it at all their registers?
It is possible that the IIAS system has been installed in specific locations within a store, the
pharmacy for example and not all registers within the store. If there is any question, please ask the
store for more information.
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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.
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Has the IRS approved the SIGIS approach?
Although there is not currently a mechanism for formal IRS approval, the SIGIS association and its members met with IRS and Treasury representatives in 2007 and 2008 to review the planned approach. In addition, SIGIS meets with the IRS when guidance is required on existing or new regulatory requirements.
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The cardholder swiped their card, but the TPA does not see a transaction, why?
You should speak with your card processor for specific details, but it may be that the cardholder was
attempting to purchase only items that the merchant did not consider SIGIS qualified items and
therefore did not submit the transaction for authorization against the card identified as being for
healthcare purchases.
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What new values will TPAs have to authorize against with the SIGIS standard?
In addition to the total value of the purchase, merchants will now be able to provide the:
- Healthcare Eligible Total - This represents the total dollar value of all healthcare eligible
items in the purchase.
- Rx Total - This total represents a sub total of the Healthcare Eligible purchases that are
prescriptions.
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Why do TPAs see some transactions with an Rx amount and some without?
The prescription subtotal is optional for merchants to support when implementing their IIAS systems.
For a list of merchants that support the Rx subtotal, please go to the merchant list at www.sig-is.org
. The "Supporting Prescription Subtotal" column indicates which merchants
have chosen to provide the prescription subtotal in their card authorization requests.
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