Finpago to the Rescue for Mass Merchants

OCTOBER 01, 2006
Eileen Koutnik-Fotopoulos

The landscape of automating pharmacy purchases has changed because of the Internal Revenue Service (IRS) 2006-69 notice. As stated in the notice, the US Treasury has determined that the most common methods of automating flexible spending account (FSA) debit pharmacy purchases will no longer work at mass merchants and grocers because these stores are deemed not "health care related retailers." The change effectively excludes the group from a $5-billion pharmacy market—a major loss of convenience for consumers who want to shop for prescriptions at their favorite retailers.

Finpago Inc has devised a solution—the FSAok Debit Substantiation service. The FSAok clearinghouse service is a total solution for automating pharmacy and OTC medication purchases made with FSA debit cards. FSAok automatically delivers a detailed electronic receipt for pharmacy and OTC purchases to the consumer's FSA benefits administrator with each eligible purchase. Now drugstore, grocery, and mass merchant retailers can make their consumers' experience easy, while enabling the employer to meet its purchase substantiation requirements outlined by the IRS.

Fred Hawkins, Finpago's chief executive officer, came up with the concept 2½ years ago. "In today's busy world, consumers want choice—and they want things to be easy," he said. "Now with FSAok Debit Substantiation, consumers will be able to purchase their prescriptions from their preferred retailer while automatically receiving the tax benefit. To top it off, our service makes shopping easier by delivering electronic receipts and claims to their FSA administrator even for OTC medication purchases."

The Conshohocken, Pa-based company also has introduced the FSAok AnyCard service. The service provides consumers with the ability to shop with their preferred credit, debit, or frequent shopper cards as they normally do and have their eligible FSA purchases automatically selected and submitted for a claim and backed by an electronic receipt. Before the advent of the FSAok AnyCard service, consumers had to tediously copy their receipts, fill out claim forms, and experience regular disappointment from unmet promises of convenience.

"Consumers are the big winners here. All they need to do is register and tell us how they normally like to pay; FSAok AnyCard automatically collects the electronic receipts and submits claims for eligible items.We made FSAs goof-proof," added Hawkins. "But everyone benefits when we take the paper out of the process. FSA account administrators differentiate their product offerings while lowering costs, and participating retailers deliver a meaningful and compelling service to attract and retain their customers with FSA accounts."

Research has indicated that the average household with an FSA account uses it for <50% of their eligible purchases. Oftentimes, consumers reported that they do not use their FSA account because they are unaware of what health care purchases their plan permits or because the claims process is a hassle and not worth the benefit.

Greg Beasley, senior vice president of sales and marketing at the company, said, "10% of Americans have [an FSA or HSA (health savings account)]. Yet, their FSA debit card is not front and center in people's minds. So they will use it for a doctor's visit but not for a bottle of aspirin."

The convenience factor with the FSAok AnyCard allows consumers to enjoy their tax-advantaged accounts without problems. The program allows a consumer-directed health care account administrator to bridge the gap between an employee's moderate interest and active participation. The card also is compatible with existing FSA Debit Card programs. For national retailers, integration is easy. Consumers will know which retailers offer the program when they see the FSAok logo, which will be available later this year. For additional information, visit