In addition, it is important for a merchant to verify that the information submitted in their 90% registration is correct. If experiencing declines, verify the MC ICA, Visa BIN and MasterCard/Visa Card Acceptor Ids are correct.
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.
US Territories US Virgin Islands (USVI), Guam, Marianas Islands / Saipan (CNMI) and American Samoa operate under a variety of US tax laws. Some mirror the US tax law while others are separate and distinct. In summary:
While SIGIS processes may support these locations members and consumers should consult with their counsel and plan administrators that operate in these markets to determine support for FSA, HRA and HSA debit cards.
As of April 12th, 2011.
Some merchants have a unique CAID for each terminal in the store, i.e., CAID 999999001 for the front of the store and 999999002 for the back of the store, that results in more than one CAID value being used in a single 90% location. Because the CAID is used in the authorization approval process for 90% Rule merchants, it is important for merchants to make sure all CAID's from qualifying stores are registered.
If a merchant’s acquirer / acquirer processor is not able to support a single CAID for all terminals within the same store, the merchant may register each terminal in the 90% registration process. To do so, create a separate store location for each terminal. Except for the Location Name and CAID, all of the other information should be the same for both "locations". Here is an example of what the location Name and CAID fields would look like:
Location 1 Name CAID
Joe's Pharmacy (Term#1) 999999001
Location 2 Name CAID
Joe's Pharmacy (Term#2) 999999002
**Please note that the merchant still must comply with the IRS regulation that the determination of eligible product percentage is at the total store level. If the total store qualifies, you may register all terminals. If the total store does not qualify, a merchant is not allowed to register any terminal for that store. When inputting the percent of gross sales, use the same value for all terminals in that store location.
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.
If a merchant should change acquirers after registering online with SIGIS, the merchant will need to create a new 90% registration. It is important to note that no changes should be made to the existing registration; doing so can cause transaction declines before the transition is complete.
The required information includes the acquirer's MasterCard ICA, Visa BIN, Maestro ICA, Interlink ID, STAR ABA, NYCE ID and Card Acceptor ID. Since the SIGIS 90% Rule Merchant information is published to issuer processors each Monday morning, SIGIS recommends that the merchant / acquirer plan the change for a Monday morning with the merchant updating their information in the SIGIS 90% form, the Friday before conversion.
The original registration should remain in place and unchanged until the acquirer change has been implemented. Once working with the new acquirer the old registration should be deleted.
Completing the 90% Rule Registration does not make a merchant IIAS-compliant. If a merchant registers to be designated as 90% Rule exempt, the merchant is stating that its store(s) are exempt from the IRS requirement to have IIAS standards in place.
An email will be sent to the merchant to confirm completion of Registration. The merchant’s store(s) will then be listed on the SIGIS website as a 90% Rule merchant which has self registered as complying with the IRS 90% Rule.
Important Notice: If a merchant does not Register for the 90% Rule Exemption or has not implemented an IIAS standard, the Merchant will find that transactions by customers with FSA/HRA cards are declined by card issuers in compliance with IRS regulations.
The Card Acceptor ID is typically assigned for each store location and is an alphanumeric value between 1 and 15 digits long and may contain numbers, uppercase letters or a dash, “-“. If a merchant needs assistance determining this number, its acquirer or service provider can provide assistance.
In IRS Notice 2007-02 and the subsequent Notice 2008-104, the IRS provides that drug stores/pharmacies (MCC's 5912 and 5122), which have 90% or more of gross sales that are Rx/prescriptions or over-the-counter Eligible Health Care Products, can be viewed as "health care merchants" by plan administrators in the debit card programs. Plan administrators are permitted to approve FSA/HRA card transactions at a drug store/pharmacy that meets the 90% Rule, if the drug store/pharmacy doesn't support an IIAS. The text of the IRS rulings are shown below:
IRS Notice 2007-2:
Accordingly, after December 31, 2008, health FSA and HRA debit cards may not be used at stores with the Drug Stores and Pharmacies merchant category code unless (1) the store participates in the inventory information approval system as described in Notice 2006-69, or (2) on a store location by store location basis, 90 percent of the store's gross receipts during the prior taxable year consisted of items which qualify as expenses for medical care under Section 213(d) (including nonprescription medications as described in Rev. Rul. 2003-102, 2003-2 C.B. 559).
IRS Notice 2008-14- Transition Relief:
The deadline in Notice 2007-2 is extended by six months so that, after June 30, 2009, health FSA and HRA debit cards may not be used at stores with the Drug Stores and Pharmacies merchant category code unless the requirements of (1) or (2) above are satisfied.
If a Member needs to change or correct any information on a 90% Registration Form that has already been submitted, the Member must implement the following steps:
The Member will receive an email confirmation upon completion and acceptance of the revised form. After the form has been accepted, any DBA updates made will be posted on the 90 % Rule Merchant List located on the SIGIS website.