WageWorks sees delay as good news for both the industry and consumers

SAN MATEO, CA – December 09, 2008 – Late last week the IRS announced its decision (IRS Notice 2008-104) to delay for six months the new health care debit card guidance that was intended to go into effect January 1, 2009. The new rule would have added pharmacies and drug stores to the list of merchants required to have an IRS approved inventory system in place to be able to accept a health care debit card. It also included an exception that would have enabled pharmacies that primarily sell health care items (known also as 90% pharmacies) to accept the Card, as long as they met certain IRS requirements.

The delay will give the as many as 20,000 independent pharmacies (who make up the majority of the 90% pharmacy class) more time to comply with the guidance. It will also help to assure the continued acceptance of the Card at most places where accountholders shop with the Card for eligible goods and services.

The rule, when it takes effect July 1, 2009, will expand the 2008 guidance that required the same inventory system for all non-health care merchants, such as supermarkets and warehouse stores. These systems ensure that the Card is only used for eligible items and eliminate the guesswork and the need to submit receipts for verification after the purchase. Participants should continue to be directed to www.sigis.com for the most up-to-date list of approved merchants and www.wageworks.com/card for tips and guidance on using the WageWorks Health Care Card.

Participants will still be able to use their card at health care providers such as doctor's and dental offices, but if they use a card for anything other than a copayment, they most likely will have to verify the transaction with their card administrator. The same will be true for purchases made at pharmacies that certify their 90% status with SIGIS, or who make arrangements directly with card issuers. SIGIS is the Special Interest Group for IIAS Standards (SIGIS), a non-profit industry group established to implement and manage an industry-wide solution for the IIAS rules promulgated by the IRS.

“This is really an early holiday present for both the industry and cardholders,” said Jody Dietel, a senior executive at WageWorks and a SIGIS Board Member. “The decision means more time for independent pharmacies to meet the IRS’ requirements, and convenience for accountholders who can continue to use their cards to shop at their local pharmacies and drug stores.”

Some important facts to note:

• IRS Notice 2008-104 was released December 4, 2008 and delays until July 1, 2009 the previous IRS guidance (IRS Notice 2007-02) extending the IIAS requirements to pharmacies and drug stores.
• The Notice also provides pharmacies that primarily sell health care items (or 90% pharmacies) an additional six months to meet the IRS’ certification requirements.
• Beginning July 1, 2009, to be able to accept a health care debit card, all pharmacies and drugstores will need to have an IRS-approved inventory system in place, or be certified as a 90% pharmacy or have an independent arrangement with the card issuers.
• Before shopping, all cardholders are advised to visit www.sigis.com for the most up-to-date list of approved merchants