Northeast Pharmacy Service Corporation

Newsletter Spotlight

FSA CARDS: PHARMACY CHOICES

From the Desk of  Dave Benoit

Unless you do something, FSA/HRA cards won't work July 1, 2009.  In 2008, we were concerned that we would have to have an IRS compliant point-of-sale (POS) system to handle FSA/HRA debit cards.  An organization, SIGIS was created to create and maintain the approved product file and the list of compliant vendors. 

In later 2008, a number of alternatives to a qualifying POS system began to appear and SIGIS added to its charter to undertake the role of identifying 90% exemption pharmacies (at least 90% of their business is in qualified health-related items).  The IRS announced a six-month postponement of the January 1, 2009 deadline.

FlexTrax is an alternative that is already running.  You need to buy $2,000 worth of equipment, unless you already have a computer that can do the job - then it's under $1,000.  Essentially, it is a cash drawer, which may replace the pharmacy department cash register.  It is connected to the Internet, so that the product file can be accessed and updated automatically.  You must join SIGIS and have Heartland as your card processor.  It costs $75 per month maintenance.

NPSC has identified and contracted with FSAok as the least expensive altenative for Participating Pharmacies who choose not to purchase a POS system.  In the FSAok program, the transactions are run through your pharmacy software as though it were another third party program.  Items are transmitted, using an ID number for the patient that has been assigned by FSAok.  Items are compared against the SIGIS file and debited to the FSA account or not as appropriate.  If a credit card has been attached to the account, non-qualified items will be taken care of in the same transaction.  FSAok is the SIGIS member - not you.  The transactions meet all the requirements of a qualified POS system.  The patients don't need to save receipts or submit paperwork to the plan sponsor.  Patients need to register their card.

The one-time setup fee is $100, discounted to $70 for NPSC Participating Pharmacies.  Monthly maintenance is $15.  Each transaction is 10¢.  There are also transaction fees for their card processing vendor, similar to what you would pay your vendor.  These fees will be withheld from the proceeds of the transactions, documented by monthly statements.  You'll have regular pharmacy switch fees too.

Tell your customers about your plan to be managing FSA cards (or not) in an IRS compliant, point-of-sale method.  Plan sponsors and employers have been steering customers to the big boxes.  The "big boxes" have been advertising their FSA compliance all through last year.  Once you get going, it might be worth your while to get some kind of advertising out to your community or to targeted customers who have become MIA (missing in action).