The IRS now requires non-healthcare retailers, including supermarkets, grocery, discount stores, wholesale clubs and mail-order merchants, to implement an Inventory Information Approval System (IIAS) in order for employees to use Flexible Spending Account (FSA) cards to purchase eligible healthcare products or prescriptions. The implementation of this requirement has been expected for several years and retailers have been allowed several extensions, but the final deadline is here.
This new IRS requirement means that CONEXIS Benefit Card holders may no longer be able to use their cards at retailers who have not updated their point-of-sale system with an IIAS. However, on the positive side, transactions at retailers who have implemented an IIAS will be automatically substantiated which means so receipt submission will be normally required.
This change does not impact “health-care merchants” such as doctors, dentists, vision providers, hospitals, etc. As long as their card processing machine is registered as a “health-care merchant,” the card transaction will be allowed. Keep in mind, however, that these non-IIAS transactions will still require substantiation so all receipts should be retained in the event CONEXIS requests the documentation. This change also does not impact an employee’s ability to pay “out of pocket” for an eligible item from any merchant and then request reimbursement via paper form–use of the CONEXIS benefit card is entirely optional.
Impact on UC-sponsored medical plans
- NextRX (Anthem Blue Cross), Caremark (Health Net) and Tel-Drug (CIGNA) are already compliant with IIAS.
- Kaiser pharmacies will be implementing an IIAS in the future. Until then, there may be occasions when Kaiser’s systems are not able to accept the Health FSA card for payment. If so, members may pay for their Kaiser Pharmacy purchases using a different form of payment and request reimbursement from CONEXIS via claim form.
Impact on University of California Medical Center Pharmacies
In 2008, the University conducted a review of its pharmacies in anticipation of this requirement. At that time, all UC pharmacies were viewed as the dispensing arm of the UC hospital and classified as “hospitals.” The CONEXIS benefit cards should continue to be accepted at UC pharmacies. However, consistent with IRS rules, purchases at UC pharmacies will not be automatically substantiated unless the payment is an exact match to a co-pay in the employee’s medical plan; receipts and documentation should be retained in the event CONEXIS requests the documentation.