Merchants that wish to allow their consumers to use FSA/HSA/HRA health benefit cards in their pharmacy will benefit from joining SIGIS and implementing the IIAS standard or registering under the 90% program.
Membership in SIGIS offers merchants access to the following programs:
SIGIS has established the procedures which enable merchants to certify that they meet the requirements to operate an IIAS. IIAS certification provides consumers with the best consumer experience and highest card authorization rate. There are two merchant IIAS certification options:
To check if your POS Vendor is certified, view SIGIS Members POS Solution Providers or contact the SIGIS Help Desk at 925-855-3228 or firstname.lastname@example.org if your POS vendor is not on the list of POS Solution Providers. Please note the POS vendor must be certified with your Acquirer Processor to use this form.
For drug stores and pharmacies that primarily sell prescriptions and eligible medical items, the IRS permits plan administrators to approve FSA/HRA card transactions without the merchant having an IIAS. SIGIS has a registration program for drug stores and pharmacies to register as 90% Rule Merchants. This generally applies to merchants using a standalone credit card terminal or a point-of-sale system (POS) that does not support the IIAS standard.
SIGIS provides additional support through our Help Desk that is available to answer any questions regarding the programs listed above.
As a paid Member of SIGIS in good standing, a merchant is able to confirm the status of its SIGIS 90% Registration or IIAS Certification status by visiting the Publications page.
Please note that the 90% Merchant list is updated each Monday morning and the IIAS Merchant list is published at 5 am PST each business day..
Potentially, yes. The IRS states that cardholders’ use of a FSA/HRA card is limited to merchants and service providers with specific merchant category codes (MCC) related to health care, including physicians, dentists, vision care offices, hospitals, and other medical care providers. The FSA/HRA card can also be used at merchants or service providers that do not have health care related merchant category codes, provided that those non-health care related merchants or service providers use an Inventory Information Approval System (IIAS). It is required that attempts to use FSA/HRA cards at merchants or service providers without a health care related MCC code and who have not implemented an IIAS be declined.
An IRS ruling highlighted merchants in categories such as supermarkets, grocery stores, discount stores, wholesale clubs, mail order vendors and web-based vendors that sell prescription drugs as examples of merchants that would not be considered health care related and would therefore fall into the class of merchants requiring the implementation of the IIAS system. Because of the broad range of the merchandise sold by many drug stores or pharmacies, the IRS has also specified that drug store and pharmacies are not to be considered medically related, and thus, must implement an IIAS capability. Additionally, drug stores and pharmacies where 90% of their products sold qualify as medically eligible items may qualify for the 90% rule exception.
No. A merchant is not required to implement an IIAS; however, FSA/HRA card issuers will not be able to approve FSA/HRA card transactions when a merchant does not support an IIAS. If you are a merchant and choose not to implement an IIAS, you do not need take additional steps. Merchants that are pharmacies/drug stores and primarily sell prescriptions and medical items may qualify under the IRS rules as a “90% Rule” merchant. See the 90% Rule Merchant FAQs for more information.
For merchants that would like to accept the FSA/HRA cards from their customers, the IRS requires Merchants selling health care eligible products to support an Inventory Information Approval System (IIAS). The IIAS system is a combination of inventory management and point-of-sale systems that can verify the health care eligibility of items purchased with an FSA or HRA debit card, generate a payment transaction that contains the required IIAS information, and includes an information archive system that allows the merchant to respond to an IRS audit(s) as required. As noted above, for Drug Stores / Pharmacies where 90% of the sales on a store-by-store basis qualify as FSA-eligible, a 90% Rule registration program is an alternative option.
Merchants have the option to not become a Member of SIGIS by establishing their own IIAS standards or 90% Rule Exemption and working with third-party plan administrators individually.
With the IIAS Certification developed by SIGIS, a non-profit standards organization, a broad range of participating merchants have been able to implement a solution that is recognized industry-wide, which enables acceptance of most FSA/HRA payment cards. Likewise, third-party plan administrators have implemented a common set of procedures that are applied to IIAS transactions at participating merchants.
One of the critical issues in supporting an IIAS solution for employer benefit plans and the third-party plan administrators (TPAs) that support these programs, is assurance that the items being approved through an IIAS solution meet the health care eligibility standards established by the IRS as defined in IRS Code Section 213(d) rules. As described above, SIGIS provides a standardized list of eligible health care-related items. While the IRS does not mandate the use of the SIGIS list, merchants supporting a SIGIS IIAS solution must use the SIGIS 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.
In some point-of-sale solutions, the third-party servicers may assist with loading the monthly updates to the merchants POS system.
Currently, merchants that are registered under the 90% Rule do not need to undertake any technical work. Issuer processors will use the Store ID/Card Acceptor ID field in authorization requests to approve FSA/HRA card transactions at registered stores. Current SIGIS requirements for drug stores and pharmacies who wish to register under the 90% program are:
Once the application is submitted, SIGIS will send a confirmation to the merchant registrant and its acquirer via email. It is extremely important that merchants double check the information sent in the email. Any errors may result in transaction declines. NOTE: If your Acquirer supports PIN FSA transactions there may be additional Acquirer Ids required based on which PIN network is supported. Contact the SIGIS Help Desk if information on PIN FSA is needed.
Merchants might need new equipment or just updates to existing software to support IIAS processing. A new POS solution could be required for merchants that do not have a POS system that can support electronic inventory management, UPC scanning, and the additional fields used in the IIAS transactions that are required. A number of POS vendors for the supermarket, chain drug store, and related merchants have updated their POS systems software to support IIAS processing. For clarification or confirmation, a merchant should contact its processing acquirer and/or POS software provider, the organizations providing your credit card / debit card solutions or the bank that provides credit card processing. Vendors will work with merchants to install any necessary updates.
Additionally, merchants can review the SIGIS POS Solution Provider list.