Flexible spending accounts (FSA), health savings accounts (HSA) and health reimbursement arrangements (HRA) let Americans pay for eligible health costs with pre-tax money, usually with a benefits debit card. Pharmacies are where a lot of that money is spent. But a pharmacy cannot simply accept the card for everything in the basket: the card should pay only for eligible items, and the purchase has to be provable later.
Two programs run by SIGIS (the Special Interest Group for IIAS Standards) make that work. This guide explains both in plain words. It is not tax or legal advice; check the current rules with SIGIS and your processor.
What is an IIAS?
An Inventory Information Approval System (IIAS) is a point-of-sale and payment setup that recognises which items in a basket are FSA/HSA-eligible and asks the card to pay only for those. It works at item level, which is why it needs the POS.
According to SIGIS, merchants running an IIAS must:
- flag eligible health-care items in their inventory using the SIGIS Eligible Product List,
- change card processing so the transaction carries the eligible (FSA) amount,
- keep itemised transaction detail so purchases can be substantiated — IRS rules expect receipts to be kept for five years.
Because the eligible amount travels with the transaction, IIAS purchases are typically auto-substantiated: the cardholder does not have to send receipts to their plan administrator.
What is the 90% Rule?
The 90% Rule lets drug stores and pharmacies accept FSA/HRA cards without item-level flagging, provided at least 90% of the store’s sales are eligible medical expenses. Eligibility follows Section 213(d) of the Internal Revenue Code, and OTC items are checked against the SIGIS Eligible Product List.
The trade-offs, per SIGIS:
- no technical changes to the POS are required,
- the merchant registers each store with SIGIS and keeps an active SIGIS membership,
- the merchant re-attests every year; a store that does not is removed from the program, and cards are declined,
- purchases are not automatically substantiated in the same way, so cardholders may need to keep receipts for their plan.
IIAS vs the 90% Rule at a glance
| IIAS | 90% Rule | |
|---|---|---|
| Who it suits | Any merchant with eligible items, including pharmacies with large front stores | Pharmacies whose sales are at least 90% eligible |
| POS changes | Yes: item flagging and eligible-amount processing | None required |
| Paperwork | Certification through processor and SIGIS | SIGIS registration + annual re-attestation |
| Receipts | Itemised, retained (IRS: five years) | Cardholder may need receipts for substantiation |
| Risk if it lapses | Cards decline on non-flagged setups | Removal from program; cards decline |
Which one fits an independent pharmacy?
A pharmacy whose sales are almost all prescriptions and eligible OTC items may qualify under the 90% Rule. A pharmacy with a large front store — cosmetics, gifts, cards, snacks — will usually fall below 90% eligible and needs an IIAS to keep accepting the cards. That is why FSA/HSA support belongs in the POS conversation at all.
What this means for GetPharmacyPOS
FSA/HSA acceptance is one of the three planned Rx features. The plan is to flag eligible items from the SIGIS list and pass the eligible amount through processors that support IIAS. Until that is built and certified with a processor, we do not support it, and we will never claim IIAS certification on the product’s behalf.
If you need FSA/HSA acceptance today, use your current pharmacy system’s certified POS, or confirm your 90% Rule status with SIGIS and your processor.
Questions to ask any POS vendor about FSA/HSA
- Which processors run your IIAS transactions, and can I see their confirmation?
- Where does the eligible-item list come from, and how often is it refreshed?
- How are split tenders handled when the card covers only part of the basket?
- Where are itemised receipts kept, and for how long?
- What happens to FSA transactions if the item list is out of date?