Congress enacted legislation that permits employers to offer benefits plans to their employees that include tax-advantaged accounts for the purchase of eligible medical expenses. These accounts are referred to as Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs). The employer’s plan administrator may offer a debit card to let the participating employees conveniently access the FSA/HRA funds for purchases of eligible medical services (such as the co-pay at a doctor’s office) or medical items (such as prescription co-pays).
The Internal Revenue Service (IRS) has set forth regulations for FSA/HRA plans, including the rules for employers and their plan administrators as well as what’s required for merchants to accept FSA/HRA debit cards. The IRS has defined two ways in which merchants can support FSA/HRA cards. One is called an inventory information approval system, or IIAS, and the other is for a drug store or pharmacy to be registered as a 90% Rule merchant. Both of these SIGIS programs, IIAS Merchant Certification and 90% Rule Merchant Attestation, are described here. Additionally, the IIAS versus 90% Rule Comparison may be helpful in highlighting the differences in requirements and benefits of the two programs.
The Federal Resource Board requires that card issuers provide merchants with the option to accept and process FSA/HRA cards transactions on at least two unaffiliated networks. To supports it members, SIGIS standards support both a signature network and a PIN network. Networks that support the SIGIS standards are required to complete a Network Certification.
Smaller merchants that use a POS vendor, called a third-party servicer or TPS, for their inventory and point-of-sale system support may be eligible to be certified as an IIAS merchant using a simplified certification capability, called TPS Merchant Certification. Additionally, information about IIAS certification for third-party servicers is described at Third-Party Servicer (TPS) Certification .
SIGIS makes available an Eligible Product List to help merchants and plan administrators easily identify items that are eligible medical expenses. The Eligible Product List is limited to eligible medical expenses as described in Section 213(d) of the Internal Revenue Code, including eligible non-prescription items.
SIGIS is a non-profit standards organization. While SIGIS certifies IIAS merchants/TPSs and registers 90% Rule merchants, SIGIS is not involved in the processing of FSA/HRA card transactions, nor has access to any data fields in IIAS transactions or needed for 90% Rule registration. Merchants must contact and work with their acquirer or POS service provider for assistance with these questions. Similarly, plan administrators contact their card issuer processor for assistance with transaction inquiries.
SIGIS is here to help merchants, plan administrators, acquirers, card issuers, and processors support IRS requirements for FSA/HRA card programs. This section describes the SIGIS programs and how the programs may be activated. The FAQs are a resource to answer many questions – be sure to check there first when you have specific question.