Inventory Information Approval System - How IIAS Works

How IIAS Works

IIAS is similar to the system used by grocery stores ever since they introduced the first barcode scanners in the 1970s to separate items eligible for purchase under the Food Stamp Program from those that are not eligible. Every item in the grocery store's database is flagged "yes" or "no" for food-stamp eligibility; the scanner automatically keeps a separate total for food-stamp items. In the beginning, the cashier pressed a special "food-stamp total" key, and the customer presented paper food stamps; today, the customer swipes an Electronic Benefit Transfer (EBT) card and selects the "food stamp" account, and the register charges only the food-stamp total to the EBT card. The remaining balance must be paid for by other means.

IIAS works in much the same way, but with medical FSAs, HRAs, or HSAs instead of food stamps: (Usually, the term "FSA" is used to cover all of them; HRAs, HSAs, and non-medical FSAs are relatively rare, and HSAs can also have regular debit cards though many of them have FSA debit cards instead.)

• Every item in the store's scanner database is flagged "yes" or "no" for FSA eligibility. (This flag is obviously separate from the one for food stamps, if there is one.)
• Prescription drugs are usually not in the main scanner database (though they may be made scannable by tying the pharmacy system into the scanners), but they are almost always FSA-eligible; therefore, the pharmacy department is often categorically flagged as FSA-eligible, the only department to be so treated. (In contrast, multiple departments of most grocery stores are categorically flagged as food-stamp eligible, including the meat, produce, and dry-grocery departments.)
• At checkout, the scanner (for brick-and-mortar retailers) or shopping cart (for online retailers) keeps a separate total for those items that are "FSA-eligible".
• If an FSA debit card is presented for payment, the scanner or shopping cart will charge the card, but for no more than the "FSA-eligible" total.
• If there are other items in the order (or if the FSA debit card did not pay for all eligible items), the scanner or shopping cart then demands another form of payment, such as cash, check, credit card or debit card, to pay for the remaining items.

IIAS does have one additional requirement that is not normally found with food stamps, though the U.S. Department of Agriculture can audit retailers directly for similar purposes: Beginning January 1, 2007, the merchant must make a record of each transaction available to the employer, or more commonly, to the employer's FSA or HRA provider. This can be done contemporaneously with the transaction, or it may be provided later if the Internal Revenue Service ever audits the employer.

The terminology used by the IRS in its descriptions of IIAS may seem unusual at first. This stems from the history of IIAS, as it was first developed by an online retailer (drugstore.com) and only later adapted to brick-and-mortar retailing. For example, IIAS is described by the IRS as an "inventory control" system tied to SKUs; but it's generally easier to understand as it was implemented by Walgreens and Wal-Mart, i.e., as a point-of-sale system tied to UPCs.