90% Rule Merchant Attestation

The IRS recognized that some drug stores/pharmacies are highly specialized, selling primarily prescriptions/Rx and other qualified medical goods and services. Thus, the IRS established the 90% Rule as an exception to the IIAS requirement. The 90% Rule applies only to drug stores and pharmacies whose gross receipts for the most recently ended tax year are 90% or more from “eligible medical expenses” as described in Section 213(d) of the Internal Revenue Code (including eligible non-prescription items). NOTE: The IRS does not permit a drug store/pharmacy to register just the prescription/RX POS counter of a store; the gross receipts of the entire store must meet the 90% Rule requirements.

The types of drug stores and pharmacies likely to qualify for the 90% Rule are those in hospitals and medical buildings, online pharmacies and specialty pharmacies (such as compounding pharmacies) - all locations where prescriptions are the primary business of the pharmacy. Drug stores and pharmacies that qualify under the 90% Rule may register with SIGIS. Participation as a 90% Rule merchant will enable plan administrators that elect to support the 90% Rule program to approve FSA/HRA card transactions.

To register as a 90% Rule merchant, merchants must first be a SIGIS Member in good standing and have paid its membership fee. The merchant will then be able to access the Members Area of the SIGIS website to complete the 90% Rule registration for each of the merchant's eligible store locations.

For Plan Administrators, while offering FSA/HRA cardholders the opportunity to use their cards at registered 90% Rule merchants is optional, it is a great way to increase the convenience and usability of an FSA/HRA card program. Transactions at 90% Rule stores are not auto-substantiated and plan administrations will need to follow their policies for substantiation of such purchases, most likely asking cardholders to forward their sales receipts.

The SIGIS 90% Rule Program Implementation Procedures are available to members in the Members Area and contains information for merchants, acquirers, plan administrators, issuers, and processors about the 90% Rule program.

Types of Merchants that Support the 90% Rule


The only types of merchants that may register for the 90% rule are drug stores and pharmacies. These merchants use one of the following merchant category codes (MCCs):

  • 5912 = Drug Store/Pharmacy
  • 5122 = Druggist/Druggist Proprietaries
Merchants that operate with other merchant category codes, including online pharmacies, are not permitted by the IRS to be designated as 90% rule merchants. In order to have FSA/HRA transactions approved, these merchants are required to support an IIAS.