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Submitting of receipts for verification of prescription and over-the-counter (OTC) purchases that were made with your FSA Spending Account Card will soon become history. The rules issued by the IRS in July 2006 (Notice 2006-69) will take effect on January 1, 2008. Because of this new regulation, merchants who accept the Spending Account Card (or any health care debit card) must implement an Inventory Information Approval System (IIAS).
When you swipe your card at the Point of Sale (POS), the merchants will validate that you are only purchasing an FSA eligible item and will provide FSA with what is required to verify the transaction without any further action by you. That means no more need for you to send in receipts. Because the IRS requires only eligible, health-related expenses to be purchased with your card, FSA recommends that you continue to save all your receipts.
What is an “Inventory Information Approval System” or IIAS as specified by the IRS?
An IIAS is part of the retailer’s Point of Sale system that identifies eligible health care FSA/HRA purchases by comparing the purchased items’ inventory control information (e.g. UPC or SKU number) against a pre-established list of eligible items. The list is restricted to “eligible expenses” as described in Section 213(d) of the Internal Revenue Code (including eligible non-prescription items). The purchase amount of the eligible items are totaled and sent to FSA card system, which approves the payment provided there are adequate funds in your Spending Account.
When will merchants be ready to meet the IRS IIAS requirements?
Many merchants will be prepared to offer this new and convenient service to FSA Spending Account card holders on January 1, 2008. Others are expected to follow throughout the year. It is anticipated that the January 1, 2008 IRS deadline will be met by numerous retailers. See below for a current list of retailers and their targeted launch dates.
What types of merchants are expected to support an IIAS?
The IRS requires retail locations that sell qualified items to have an IIAS in place by January 1, 2008 for the purpose of accessing your FSA Spending Account funds.
All merchants within the following categories must have an approval system in place by 1/1/2008:
- Grocery/Supermarkets
- Online Pharmacies
- Discount Stores Warehouse Clubs Convenience Stores
All merchants within the following categories must have an approval system in place by 1/1/2009:
- Drug Stores
- Pharmacies
- Druggist/Druggist Sundries
For a complete list of retailers supporting IIAS, please refer to the document entitled “IIAS Participating Merchants” in the “Get Documents” section of the FSA website. That list contains up to date information on the merchants who currently support or will be supporting the approval system. When you use your FSA Spending Account Card for an eligible health care expense at one of the merchant locations listed, your purchase will be automatically authorized. This means your card will only be accepted for purchasing eligible items. If you are purchasing ineligible items, you will be asked for another form of payment.
Although many merchants will be able to support the approval system starting 1/1/2008, there are many others that will not be able to. Please be aware that you may not be able to use your Spending Account Card at some merchants that previously accepted the card. Grocery and Discounts stores not listed in the “IIAS Participating Merchants” document will not accept the card as a form of payment.
As always, you can pay for eligible expenses with another form of payment and file a reimbursement request by fax or U.S. Mail. If you have any questions, please contact Employee Benefit Concepts, Inc at (248) 855-8040.
Click here for up to date merchant list.
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