Issues with the new IIAS system for debit cards!

Folks as you know, debit cards are impacted by the new IIAS system that was put in place January 1st. In late 2007, the IRS determined that debit cards needed more verification, and thus required the use of a system that would “flag” the item as ok for payment in a flex plan. Prior to the new IIAS system, the card only knew WHERE (merchant) it was swiped… not WHAT was swiped. The IRS didn’t like the ambiguity because some TPAs told their clients that the card “knew” what was bought and this created abuses. In a few instances, the card provider had “feeds” from pharmacy managers (PBMs), and in this case the card “knew” what was purchased. For the new approved merchants that are bringing the IIAS on line visit: IIAS Merchant List

The card is required to be swiped at merchants with coded debit card terminals that could distinguish items purchased which are medical or non-medical. If the store is a “big box retailer” or grocery store and has a pharmacy within, it is required to use the merchant inventory control system that will flag the claim as FSA ok. Walgreens and Wal-Mart have this type of arrangement, as do others. See the list contained above. For the latest information on debit cards, go to our web site at

Now that the new technology is implemented, there are bumps occuring nationwide. Cards are being declined at IIAS terminals, and at stores that are using the IIAS. The declines are due in part because the technology is new, and the kinks are being worked out. It seems to be regional and by retailer. For example, I just got off the phone with a TPA from the east coast, and they are getting higher than average declines. We are nationwide and have very few issues.

To sum up, let us know if you are a client of eflex’s or let your current vendor know of any issues. New technologies are always “fun” to implement because there are issues no one can foresee. Regardless, the new IIAS system should alleviate nearly 90% of requests for documentation, and that is good news for participants. Let the learning curve begin!!!