The Derbin Amendment Affects Section 125 Debit Card Holders


The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 contains what is known as the “Derbin Amendment” which requires Personal Identification Numbers (PIN) be linked to all debit cards linked to Section 125 pre-tax accounts. These accounts include the health savings account (HSA), flexible spending account (FSA), health reimbursement arrangement (HRA), Dependent Care Account and Transit Account.

  • Beginning April 1, 2013, the Durbin Amendment applies to all debit card transactions.
  • Beginning May 1, 2013, plan members must activate their new debit card before using.

Your employees will need to set up a Personal Identification Number (PIN)
Merchants pay different fees for different types of transactions. Currently, when consumers swipe a debit card for a qualified Section 125 payment, they must choose “credit.” Under this new law, merchants and consumers have the choice of how they use debit cards.

This means that merchants who accept debit cards can choose to process these cards as “debit,” which requires a PIN to complete the transaction. As a result, each employee in your plan will need to obtain a PIN for the debit card. If an employee also has cards for a spouse and/or dependent, they will all use the same PIN as the employee.

Communicating with your employees
Employers should work with their pre-tax administrator to ensure that this message gets out in a timely manner. You administrator should be sending you template letters for participants and information where participants can call if they have questions.

Debit Card Activation
A likely result of the legislation is that new debit cards will no longer be pre-activated. This includes cards for new employees in the plan, as well as replacement cards for current plan members. Employees receiving a new card will first have to activate the card, just as they do for any other debit or credit card.