Wait A Bit (More)?

  Four years have passed since health savings accounts entered the U.S. marketplace, yet the consumer-driven health plans once expected to help bolster debit card issuance and transaction volume generally have yet to catch on.
  However, other pretax health care programs in which debit cards also play a key role, namely flexible-spending accounts and health-reimbursement accounts, have grown. And as this month’s cover story by Cards&Payments Associate Editor Kate Fitzgerald points out, a new Internal Revenue Service rule that took effect this year could help to drive further debit card adoption for such programs.
  Under the new rule, which took effect Jan. 1 for general retailers and will affect pharmacies next January, merchants must identify items eligible for purchase from tax-free health care accounts and place the purchase information in a special field when seeking a transaction authorization from the card issuer. This will enable plan administrators to authorize spending from the pretax accounts immediately when eligible products are being purchased.
  Consumers, however, will need to use another form of payment when also buying nonqualified items. This, I expect, will lead to problems at the checkout lanes.
  I know I wouldn’t want to be standing in line behind someone using a health-plan debit card who also is buying nonqualified products, which will require a separate, second transaction. And what are the chances that a clerk, perhaps still in high school, will be able to handle situations quickly when the health-plan cardholder disputes the issuer’s rejection of a purchase because it doesn’t qualify?
  The rule change, however, will mean many U.S. consumers with FSA or HRA debit cards will be relieved of the need to submit paperwork separately to their employers or plan administrators for verification when they buy eligible medical products.
  The IRS has resolved an expensive and tedious substantiation issue for consumers and plan administrators. But it also likely has created longer waits in line at the point of sale.
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