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Rules for Health Care Account Debit Cards

Over-the-counter (OTC) drugs and medicines (except insulin) are not qualified expenses, and account holders should not use HSA, FSA, or HRA funds to purchase OTC medications without a doctor’s prescription. Account holders should not use their debit cards when making purchases for OTC medications, without a prescription. 

How Does This Ruling Affect FSA and HRA Debit Cards?

The health care reform ruling changed how FSA and HRA debit cards work. On January 1, 2011, FSA and HRA debit card transactions no longer received point-of-sale approval for OTC medications. However, if you have a doctor's prescription for OTC medications, you can still use your card. 

FSA and HRA debit cards work at pharmacies that are Inventory Information Approval System* (IIAS) certified or those stores certified under the IRS 90% rule. (The 90% rule allows an exception to having IIAS certification if 90% of the store’s income is generated from eligible health care products or services.) 

When an account holder swipes the Visa® Health Account debit card† at a merchant with an IIAS certification, the system identifies whether each product or service purchased is an eligible or ineligible health care expense. If there is enough money in the FSA or HRA, the eligible expense is automatically deducted from the HealthEquity account. If the account holder is purchasing ineligible items, the merchant will ask for another form of payment. A local drug store or pharmacy could deny the FSA/HRA debit card if the store hasn't implemented IIAS or doesn't meet the 90% rule. 

How do I know if my drugstore is a certified merchant? 

Most drug stores and pharmacies have already implemented IIAS. Costco, CVS, Kmart, Kroger, Safeway, Sam’s Club, Target, Wal-Mart, and Walgreens are just a few of the merchants continuing to accept health care debit cards, such as the HealthEquity debit card. Find a full list of IIAS-certified merchants and a list of 90% Rule merchants on the Special Interest Group for IIAS Standard's (SIGIS's) web site.

What If an account holder’s doctor prescribes an OTC medication? 

If a provider prescribes OTC medications to treat a specific medical condition, you'll need to give the pharmacist your prescription to purchase OTC medicines using your debit card. The pharmacist will dispense your medicine and give it an Rx number.

How will FSA/HRA expenses be verified? 

At IIAS-certified pharmacies, qualified FSA/HRA purchases will automatically be verified at the point of sale. Manual verification will be required for OTC expense; you'll need to give the pharmacist your prescription to purchase OTC medicines using your debit card.

†This card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc. The Bancorp Bank; Member FDIC.