IIAS 90% Rule Program: Its Affect On FSA And HRA Debit Card Use

Published January 2010

What is the 90% Rule?
The 90% rule program if for drug stores and pharmacies who want users of FSA and HRA debit cards to have the ability to swipe cards in their stores, but are not an IIAS Registered Merchant. IIAS was established in 2008 as a way to prevent participants from using their FSA and HRA debit cards to pay for items that are not FSA and HRA eligible.

How is a 90% Merchant determined?
The 90% Merchant Rule allows drug stores and pharmacies to continue to accept FSA and HRA debit cards if at least 90% of sales come from items which qualify as medical expenses (including over-the-counter eligible healthcare items) and they register with the Special Interest Group for IIAS Standards (SIGIS). Please click here to visit the SIGIS website.

In determining the percentage of its receipts that are eligible healthcare goods or services, the merchant must adhere to the criteria provided in Section 213(d) of the Internal Revenue Code. With respect to over-the-counter items, the merchant must refer to the SIGIS Eligible Product List and the SIGIS Eligible Product List Criteria for Supporting Private Label Items.

Re-registration is required annually for 90% rule merchants; they just need to follow the instructions provided when they receive their renewal notices.

How does this affect BASIC FSA and HRA debit card participants?
Purchases at 90% Rule stores are not auto-substantiated and IRS regulations require BASIC to substantiate such purchases by asking cardholders to submit their sales receipts. We advise participants to retain all receipts as many participants are not aware of which merchants are an IIAS Registered Merchant or 90% Rule Merchant. If manual substantiation is required the participant will receive notification from BASIC between 2-7 days after the purchase.

In addition, if a 90% Rule Merchant does not re-register annually, participants with FSA or HRA debit cards that have been accepted for a previous purchase may not be accepted for a future purchase.

We encourage BASIC FSA and HRA debit card clients to forward or post this information for participants.

For more information.
Please click here to visit the SIGIS website.
Please click here for the IIAS Merchants List.