IIAS Compliance for FSA Cards

In 2006, the IRS issued a notice describing an “inventory information approval system” or IIAS for use in auto-substantiating flexible spending accounts (FSA) and health reimbursement arrangement (HRA) claims, (click here to view the IRS ruling). Under this notice, pharmacies are required to have an IIAS in place by July 1, 2009 or they will be unable to process FSA purchases at the point of sale.

The IRS provided an exemption called the “90% Rule” whereby pharmacies with greater than 90% of total receipts that are Qualified Healthcare Products are exempt from IIAS. However, the implications of this rule are detrimental. Read more...

The intent of the IRS ruling was to reduce the paperwork for consumers and FSA administrators while also eliminating the misuse of FSA funds. IIAS certified pharmacies are able to substantiate their FSA transactions through the store’s POS system and automatically pay for qualified health products without their customers having to submit receipts.

In response to the IRS ruling, the Special Interest Group for IIAS Standards (SIGIS) was formed to produce and promote a voluntary industry standard solution to meet the IRS requirements for operating an IIAS, and to help pharmacies with the transition to accept FSA cards. Emporos Systems has been intimately involved with SIGIS as a member of several committees and our MerchantSoft™ and MerchantSoft™Lite software are certified by SIGIS. Emporos Systems worked closely with everyone in the industry to enable our pharmacies to meet these new guidelines.

As a SIGIS-certified TPS Solution (Third Party Servicer), Emporos Systems is able to help pharmacies quickly certify and accept FSA cards by completing the short form online and installing our IIAS certified software.