Submitting Debit Card receipts for retail purchases may soon be a thing of the past.
Beginning January 1, 2008, you won’t have to submit receipts for verification of your prescription and over-the-counter (OTC) purchases made with your SHPS Spending Account Card due to new IRS rules.
When you swipe your card at participating merchants, their system will validate that you are only purchasing an FSA eligible item and will provide SHPS with the information required. That means you no longer have to send in your receipts. However, since the IRS requires that only eligible, health-related expenses can be purchased with your card, SHPS recommends that you continue saving all your receipts.
Frequently Asked Questions
Q. What is an “Inventory Information Approval System” or IIAS as specified by the IRS?
A. Because of this new regulation, merchants who accept the Spending Account Card (or any healthcare debit card) must implement an Inventory Information Approval System (IIAS). An IIAS is part of the retailer’s Point of Sale system that identifies eligible healthcare FSA/HRA purchases by comparing the purchased items’ inventory control information (e.g. UPC or SKU number) against a pre-established list of eligible items. The list is restricted to “eligible expenses” as described in Section 213(d) of the Internal Revenue Code (including eligible non-prescription items). The purchase amount of the eligible items are totaled and sent to SHPS, which approves the payment provided there are adequate funds in your Spending Account.
Q. When will merchants be ready to meet the IRS IIAS requirements?
A. Many merchants will be prepared to offer this new and convenient service to SHPS Spending Account cardholders on January 1, 2008. Other merchants are expected to follow throughout the year. It is anticipated that most retailers will meet the January 1, 2008 IRS deadline.
Q. What types of merchants are expected to support an IIAS?
A. The IRS requires retail locations that sell qualified items to have an IIAS in place by January 1, 2008 for the purpose of accessing your SHPS Spending Account funds. All merchants within the following categories must have an approval system in place by January 1, 2008:
- Grocery/Supermarkets
- Warehouse Clubs
- Discount Stores
- Convenience Stores
- Online Pharmacies
All merchants within the following categories must have an approval system in place by 1/1/2009:
- Drug Stores
- Pharmacies
- Druggists/Druggists Sundries
For a complete list of retailers supporting IIAS, please refer to the document, IIAS Participating Merchants. The list contains up to date information on the merchants who currently support or will be supporting the approval system. When you use your SHPS Spending Account Card for an eligible healthcare expense at one of the merchant locations listed, your purchase will be automatically authorized. This means your card will only be accepted for purchasing eligible items. If you are purchasing ineligible items, you will be asked for another form of payment.
Although many merchants will be able to support the approval system starting January 1, 2008, there are others that will not. Please be aware that you may not be able to use your Spending Account Card at some merchants that previously accepted the card. Grocery and Discount stores not listed in the IIAS Participating Merchants document will not accept the card as a form of payment.
As always, you can pay for eligible expenses with another form of payment and file a reimbursement request by fax or U.S. Mail. If you have any questions, please contact the customer service number on the back of your card. SHPS, Inc. 12/07
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