Do you have pharmacy or drug store merchants who are experiencing a significant number of declines on FSA card and/or HSA transactions? A lot of our pharmacy and drug store merchants register as a “90% Rule” Pharmacy or Drug Store, which means the merchant specified that 90% of their gross receipts for the prior tax year consist of items which qualify as eligible medical care under the IRS Rules – Section 213(d). Many issuers are no longer approving FSA/HSA transactions at merchants registered under the 90% Rule. If an FSA/HSA transaction is declined, the cardholder will need to pay with another method of payment and submit a claim form with their itemized receipt to their FSA/HSA issuer for reimbursement. Having to file a claim is a big inconvenience for the cardholder and could drive business away from smaller merchants to bigger pharmacies or drugstores that use an Inventory Information Approval System (IIAS). Merchants who are registered as 90% Rule may want to consider investing in software that utilizes IIAS standards in order to minimize declines.

Why Are Card Transactions Declining?

Implementation of an IIAS system or completion of a 90% registration does not mean that all card transactions will be approved. There are many valid reasons for a card transaction decline. If a cardholder experiences an unexpected decline, merchants can check for one of these common issues outlined below by SIGIS, the Special Interest Group for IIAS Standards. Keep in mind that Clearent has no control over issuer decisions, and limited visibility into the reason for a decline, so the list below is a starting point, but the cardholder may ultimately need to call the number on the back of their card to find out why the transaction was declined.

Most Frequent Valid Decline Reasons

  1. The card has not been activated or has been suspended.
  2. The card has no funds remaining, or the card has insufficient funds and the merchant does not support partial authorization.
  3. The cardholder is attempting to purchase only non-healthcare eligible items with a card that has only an FSA and/or HRA purse.
  4. The participant’s plan only reimburses the prescription drug amount and
    1. The merchant does not send the prescription amount in the authorization message, or
    2. The plan requires a match to claim(s) from a pharmacy benefit manager (the cardholder’s prescription drug plan) and the transaction failed to match, or
    3. The merchant sends the prescription amount, but does not support partial authorization and there are non-prescription items being purchased.
  5. The participant’s card has not been loaded with funds for the new plan year because of delays by the employer or the plan administrator in getting the enrollment file to the issuer processor.
  6. The merchant sent an expiration date that does not match the date in the issuer processor’s system. This can happen when there is an error manually entering the expiration date.
  7. The merchant manually enters in a card number that does not match a valid card on file with the issuer.
  8. The cardholder was issued a new card, either because their employer changed plan administrators or they changed employers, but is continuing to use the old card that has been closed.
  9. The participant’s benefit plan does not allow the participant to use their card at a 90% registered merchant. Some benefit plans only allow the participant to use their card at an IIAS certified merchant that is using a point of sale system.
  10. The participant tried to use their card as a PIN debit and the merchant does not support PIN debit FSA transactions.
  11. The merchant’s POS may not be up to date with the latest BIN file updates or eligible product list updates.

If you have questions or need more information, please contact the Clearent Sales Support team at 866.435.0666, Ext. 604 or

Article by Clearent by Xplor

First published: March 17 2023

Last updated: March 28 2024