How Telehealth Merchants Can Unlock FSA/HSA Dollars Without the SIGIS Headache

If you run a telehealth business—whether you're prescribing sleep aids, women's health supplements, at-home labs, or ongoing wellness subscriptions—you're operating in a space that's clearly healthcare but not always clearly eligible when it comes to Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs).

That creates a major problem:

• Consumers want to use their pre-tax benefits. In 2024 alone, $4.5B in FSA funds went unused. Much of that could have flowed into telehealth.

• Merchants want higher conversion and retention. FSA/HSA payments unlock ~30% higher AOV and ~40% better subscription retention.

• But acceptance is broken. Existing rails—SIGIS, IIAS, or “90% rule”—were built for in-store retail pharmacies, not telehealth platforms or Shopify checkouts.

This guide breaks down:

1. Why FSA/HSA acceptance is especially important for telehealth brands.

2. How the SIGIS and IIAS rules actually work (and why they fail telehealth).

3. Why reimbursement-first platforms like Burst are the modern solution.

4. Practical steps for turning FSA/HSA into a revenue engine.

5. FAQs to help you navigate merchant decisions.

Why Telehealth Brands Can't Ignore FSA/HSA Dollars

Telehealth has exploded, with consumers expecting to access everything—from prescriptions to wellness coaching—digitally. Yet FSA/HSA acceptance lags far behind in this channel. Here's why it matters:

1. Massive unlocked consumer wallet.

• There are 100M+ Americans with FSA or HSA accounts.

• The average household sets aside $1,500–$3,000 annually.

• That's pre-tax money consumers will spend on eligible health.

2. Consumers actively shop with benefits in mind.
   Surveys show that 64% of FSA/HSA account holders prefer brands where their benefits work seamlessly.

3. AOV lift and loyalty.

• Telehealth brands see ~30% higher cart sizes when shoppers can use FSA/HSA dollars.

• Subscriptions retain at a 42% higher rate when paid with pre-tax accounts.

4. Competitive edge.
   Telehealth is crowded. Offering “FSA/HSA eligible, no paperwork” is a conversion driver and differentiator.

The SIGIS & IIAS Rules: What Telehealth Merchants Need to Know

To understand why most telehealth merchants struggle with FSA/HSA acceptance, you need to decode the alphabet soup of SIGIS, IIAS, and the 90% rule.

What is SIGIS?

• Special Interest Group for IIAS Standards (SIGIS): an industry consortium set up in 2007.

• Its goal: help merchants, processors, and banks manage which products are FSA/HSA eligible.

What is IIAS?

• Inventory Information Approval System (IIAS): the mechanism behind SIGIS.

• It matches SKUs at checkout against an eligibility database.

• If your cart is 100% eligible, the FSA/HSA card approves. If not, it declines.

The Two Main Certification Paths

1. IIAS Merchant Certification.

• You must run SKU-level eligibility checks at point of sale.

• Requires approved POS system, inventory feeds, and audit compliance.

2. 90% Rule Merchant Certification.

• If 90%+ of gross sales are on eligible healthcare items, you can bypass SKU checks.

• Works for brick-and-mortar pharmacies. Not viable for mixed-use or digital-first brands.

Why This Breaks for Telehealth

• Subscriptions & recurring billing. IIAS wasn't designed for monthly telehealth programs.

• Digital delivery. Telehealth SKUs aren't standardized like retail pharmacy SKUs.

• Mixed carts. Telehealth may bundle services + products, which IIAS doesn't parse cleanly.

• Cost. Certification requires audits, POS rewiring, and ongoing compliance—expensive and slow.

In short: SIGIS was designed for Walgreens, not for a Shopify-hosted supplement brand or a digital-first telehealth clinic.

The Merchant Burden of Going SIGIS

Here's the reality if you try to go the SIGIS route as a telehealth merchant:

1. SKU mapping nightmare.
   Every product must be tagged and synced with eligibility databases. Managing this at scale (100K+ SKUs) is operationally brutal.

2. Annual audits.
   SIGIS requires re-verification and inventory checks. This eats into compliance budgets.

3. Processor limitations.
   Even if you certify, your payment processor must support IIAS logic. Many don't.

4. Declines at checkout.
   Mixed carts (eligible + non-eligible) often decline. Customers abandon.

5. No support for subscriptions.
   Monthly recurring telehealth services fall outside the IIAS framework, leading to declines even when clinically eligible.

Telehealth merchants don't have the time, margin, or infrastructure to take this on. Which is why most give up—and lose FSA/HSA dollars.

Reimbursement-First: A Better Path for Telehealth

Rather than bending your checkout to fit 2007-era rules, modern platforms like Burst flip the model:

How It Works

• Shopper pays with any method (credit, debit, Apple Pay, etc.).

• Burst handles reimbursement in the background by connecting to the consumer's FSA/HSA account.

• Eligible products/services are flagged post-purchase.

• Funds flow back to the consumer seamlessly—no forms, no declines.

Why This Fits Telehealth

1. Subscriptions work. Recurring reimbursements apply automatically.

2. Mixed carts are fine. Eligible items reimbursed, non-eligible aren't. No decline risk.

3. No POS rewiring. You keep your existing checkout stack.

4. Compliance handled. Burst integrates eligibility logic, LMN handling, and TPA rules.

5. Happier customers. Shoppers don't think about eligibility—they just buy, and see savings.

Merchant Benefits

• Revenue lift. Capture FSA/HSA spend without conversion drop-offs.

• Faster go-live. Skip months of certification; integrate in days.

• Scalability. Works across digital, in-person, and hybrid telehealth.

• Customer trust. Position as “FSA/HSA friendly” without caveats.

Detailed Listicle: 10 Reasons Telehealth Merchants Should Go Reimbursement-First

1. Eliminate checkout declines. No more losing customers because one item wasn't eligible.

2. Capture subscription dollars. Finally make recurring telehealth eligible for pre-tax funds.

3. Skip SIGIS headaches. No audits, SKU mapping, or 90% threshold calculations.

4. Win bigger baskets. Average cart sizes rise 20–30% when consumers can tap FSA/HSA.

5. Boost loyalty. Subscriptions paid with pre-tax funds renew at far higher rates.

6. Expand eligible inventory. Cover services + products without compliance bottlenecks.

7. Future-proof payments. Works across e-commerce, in-person, and omnichannel flows.

8. Transparent reporting. Track reimbursed spend, customer savings, and incremental revenue.

9. Speed to market. Go live in weeks, not quarters.

10. Customer delight. Shoppers feel like they got “free money back”—an emotional loyalty driver.

Practical Steps for Telehealth Merchants

1. Audit your catalog. Identify products/services clearly FSA/HSA eligible.

2. Highlight eligibility. Tag items “FSA/HSA eligible” in your store, marketing, and checkout.

3. Integrate reimbursement-first platform (like Burst). No certification required.

4. Educate customers. Use banners, FAQs, and email flows: “Use your pre-tax dollars here.”

5. Leverage subscriptions. Frame subscriptions as “FSA/HSA eligible with Burst” to reduce churn.

6. Track impact. Monitor AOV, retention, and reimbursed spend as new growth KPIs.

FAQ for Telehealth Merchants

Q: Can't I just register under the SIGIS 90% rule?
A: Almost never. Telehealth often sells a mix of products/services, and rarely meets the “90% eligible” threshold. Plus, 90% was designed for physical pharmacies, not digital health.

Q: What about FDA approval—do my products need it?
A: No. FSA/HSA eligibility is based on IRS rules and healthcare provider determinations (often with LMNs). FDA approval is not a prerequisite.

Q: How do Letters of Medical Necessity (LMNs) fit in?
A: Many telehealth services and products are eligible with an LMN. Burst automates this process, cutting weeks of paperwork into hours.

Q: Will my customers trust reimbursement flows?
A: Yes. Reimbursement is the standard experience for 90% of FSA/HSA spend today (doctor visits, dental, vision). Burst just makes it instant and digital.

Q: Does this work for in-person care too?
A: Absolutely. Burst covers omnichannel—so if you add an in-person clinic or pop-up, the same flow applies.

Q: What's the merchant cost?
A: Burst operates on a success-fee basis (5–10% of reimbursed volume). There are no upfront compliance or certification costs.

Q: What happens if only part of the cart is eligible?
A: Eligible items are reimbursed, non-eligible aren't. The customer never experiences a decline.

Q: How fast can I go live?
A: Telehealth merchants typically integrate in days to weeks, compared to months or quarters for SIGIS.

Conclusion

Telehealth merchants sit at the intersection of healthcare, e-commerce, and recurring subscriptions—the very places where SIGIS-era solutions fail hardest.

Trying to force your checkout into IIAS compliance means operational burden, customer declines, and lost revenue.

A reimbursement-first model like Burst makes it effortless:

• Consumers pay however they want.

• Reimbursement happens automatically.

• Merchants capture higher conversion, bigger carts, and stickier subscriptions.

Telehealth is the future of care. Don't let outdated payment rails hold you back from billions in pre-tax healthcare dollars.