Understanding the new IRS regulations: IIAS and substantiationStarting on January 1, 2008, the new IRS regulations take effect and introduce the Inventory Information Approval System (known as IIAS). These regulations combined with IIAS will significantly affect FSA/HRA card transactions. What are the new IRS regulations?The new IRS regulations prevent participants from purchasing ineligible items with their FSA/HRA card. As of January 1, 2008 all grocery stores, discount stores, and online pharmacies must be IIAS certified in order to accept FSA/HRA cards. Pharmacies do not have to be IIAS certified until January 1, 2009 in order to accept FSA/HRA cards. What is IIAS?An inventory information approval system, or IIAS, is technology used by retailers to ensure all FSA/HRA card transactions are eligible expenses under IRS regulations. Every item in the store's scanner database is flagged "yes" or "no" for plan eligibility. What do the new IRS regulations mean to participants?Health care, dental or vision provider offices:
Your BASIC FSA/HRA card will continue to be accepted the same as it has in the past. Participants will continue to send in documentation to substantiate their purchase in accordance with IRS regulations. Pharmacies:
Pharmacies will continue to accept your BASIC FSA/HRA card through December of 2008. The BASIC FSA/HRA card can be used to pay for all eligible items. Participants will continue to send in documentation to substantiate their purchase in accordance with IRS regulations. IIAS Merchant Certification:
Following are the most common examples of merchants affected by IIAS regulations: - grocery stores
- department stores
- discount stores
- warehouse clubs
- online/mail order pharmacies
Each merchant is responsible to be IIAS certified by a third party organization in order to accept FSA/HRA cards. Neither BASIC nor employers are involved in the certification of merchants. IIAS Certified Merchants:
IRS eligible items can be charged to your BASIC FSA/HRA card. Any items that are not IRS eligible will need to be paid for with another form of payment in a separate transaction. Participants do NOT need to send in documentation because IIAS ensures that the purchases are IRS eligible. We recommend participants keep all receipts when they have used their BASIC FSA/HRA card just in case BASIC needs to review them. Non IIAS Certified Merchants:
Merchants without IIAS certification will no longer accept FSA/HRA cards, including the BASIC FSA/HRA card. IRS eligible items can be purchased using another form of payment. Participants can then send in documentation to be reimbursed for their purchase.
The benefits of IIASIncreased Auto-Substantiation: As a result of IIAS participants will benefit from higher auto substantiation and reduced paper claims. More and more merchants will become IIAS certified to stay competitive. This list will continue to change as merchants receive their certification. Visit www.basiconline.com/IIAS/ to view the most recent list.
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Click here for a list of merchants and their anticipated IIAS certified date. BASIC Flex
800-FSA-FLEX
(800-372-3539)
flex@basiconline.com
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