Every year, I put money into a Flexible Spending Account to pay for various health care needs through the year. Where I work, we get a Visa debit card so we don't have to pay out of pocket and then submit receipts for reimbursement.
CVS.com and drugstore.com allow me to use my FSA card online for eligible items, but Amazon doesn't. I'm not sure if there's a legal reason Amazon can't do the same thing, but if there isn't, it would be nice to have that feature.
Ryan: that's simply untrue. If anyone has an FSA, they can clearly read the new rules which would probably be provided by his/her employer. Many OTC items are still clearly approved for FSA purchases, however, a letter of medical necessity would be required for some of them. What you've posted is an exceptionally clear example of how easy it is to get wrong or misleading advice/info on the internet.
"What you've posted is an exceptionally clear example of how easy it is to get wrong or misleading advice/info on the internet. "
Or from Faux Newsish programs.
You are right Tony. I have a Pro-card from work. The Card issuer places restrictions on the vendor category of purchase you can make. So, I could by gum at a gas station, but I cant at a liqueur store (just an example).
I don't know that it's totally a restriction placed by the issuer, but I don't know. I know that the IRS requires specific controls be put in place, but I'm not sure a company can be denied by an issuer if they meet the IRS regulations. Maybe they can... I'm not sure.
I have a HSA and these are the some of new rules sent to me for mine.
* Over-the-counter (OTC) medicines and drugs will no longer be eligible for tax-free reimbursement from an HSA without a doctor's prescription. This includes pain relievers, sleep aides, and cough medicines. * Certain OTC purchases, such as insulin, bandages, and medical devices, continue to be eligible for tax-free purchase from an HSA without a prescription.
"I don't know that it's totally a restriction placed by the issuer, but I don't know."
It is. Now you do know.
Each vendor has a category code. Every card is cleared for certain codes. Every vendor wants to accept any card they can - it's a sale after all. If your account is in good standing but your card is not being accepted, it is NOT the vendor that is blocking it - it is the issuer. Why would Amazon not want your money?
But doesn't the vendor first have to be approved the IRS by setting up an inventory information approval system (IIAS)? If Amazon's done that, they're not talking about it in the help section (but I haven't actually asked customer service). The other sites I use that take my debit card all make a big point out of it and clearly mark each FSA-eligible item with a symbol.
On an unrelated note, I found out on December 28 I still had almost $400 left on my account.
Certain employers have a grace period and some don't I believe but don't quote me on that. :D Several years ago I had LASIK done the first week of January 2007. I used my FSA money from 2006 then applied the difference with my 2007 FSA funds. I was able to do it because my employer had a grace period until March.
Oops, didn't finish the story. After I found out how much I had in my FSA, I also found out that I hadn't used my vision insurance. The next day, I got an exam, fancy glasses, and year's supply of contact lenses with it... and still had $3 in my FSA.
If a store certifies as only selling 100% medically eligible merchandise, then they don't have to set up an inventory system IIAS. Obviously, Amazon.com isn't such a merchant. My issuer says that the IRS prevents them from authorizing purchases from Amazon.com (Amazon Marketplace), and I infer from that statement that the reason is that Amazon (and all their resellers) don't have that set up to certify that all the merchandise in the order is on the eligible list. So, I cannot use my FSA !CARD!, but I can submit my receipt and access the FSA !FUNDS!. It's just a bit more work for me.
It may work if Amazon implemented http://en.wikipedia.org/wiki/Inventory_information_approval_system There are places that can accept debit cards for FSA etc. by having eligibility of each item in their system. If any one item at checkout is ineligible the transaction is not coded in a eligible category and is declined. Other places that just sell enough eligible merchandise fall under a 90% blanket, that is all the transactions are cleared if 90% or more of the business that point of sale does is eligible according to IRS rules. I imagine implementing IIAS is not cheap, but a place like Amazon would not surprise me to have it. There are eligible items I pay more money for because of the convenience of quickly and easily ordering with a card from a 90% place.
I called my HSA provider ahead of time to see if they would pay for something purchased through Amazon, and she told me they would but I had to provide proof of eligibility of the purchase if asked later. So I used the HSA card and at first it went through, but later I found out Amazon wouldn't accept it. There is a place under Payment Help that points out Amazon will not accept payment from FSA or other health accounts (Wish I would have checked this out first.) So it is Amazon and not the HSA provider that is denying the purchase.
If you read the reply from Jan 1, 2011 10:17:09 PM PST above, you'll see a clear explanation:
>>>> Each vendor has a category code. Every card is cleared for certain codes. Every vendor wants to accept any card they can - it's a sale after all. If your account is in good standing but your card is not being accepted, it is NOT the vendor that is blocking it - it is the issuer. Why would Amazon not want your money? <<<<
Your HSA provider may not object to you using your card at Amazon, but the card processing systems won't allow it.
Why did it appear to initially work? Because at the time you created the order, you were not immediately charged. Amazon didn't even do a pre-authorization check on your card.
But as soon as they tried to process the charge, the card processing systems declined the charge.
Your HSA provider has no say in this. Amazon has no say in this. It is controlled by the card processing network as a way for them to remain compliant with the law.