Tax Information And Guide

drugstore.com, inc. and WageWorks Partner to Simplify FSA Shopping Experience

Automatic Verification of Eligible Expenses at Point of Sale Takes the Guesswork Out of FSAs

BELLEVUE, Wash. & SAN MATEO, Calif.--(BUSINESS WIRE)--July 13, 2004-- drugstore.com, inc. (Nasdaq:DSCM), a leading online provider of health, beauty, vision, and pharmacy products, and WageWorks, Inc., a leading provider of consumer-friendly employee spending accounts for health care and dependent care, have partnered to enable automatic verification of flexible spending account (FSA)-eligible purchases made using the WageWorks Health Care Card at the drugstore.com(TM) online store. The arrangement provides WageWorks health care account participants a convenient shopping experience at drugstore.com, inc. and increases the availability of paperless substantiation of FSA-eligible purchases.
"The convenience of the drugstore.com(TM) online store and the flexibility of the WageWorks Health Care Spending Account come together to create an optimal consumer experience," said Jeff Kimmell, vice president, healthcare services, and chief pharmacy officer of drugstore.com, inc. "Together, we're making it easier for drugstore.com(TM) customers to tap into tax-advantaged health care dollars."

Purchasing FSA-eligible products at the drugstore.com(TM) Tax Advantaged Online Store is simplified for WageWorks customers. FSA-eligible products are tagged at the online store with a special icon to help eliminate confusion about which types of over-the-counter (OTC) purchases are generally eligible for FSA reimbursement. When a WageWorks customer shops online at the drugstore.com(TM) Tax Advantaged Online Store, eligible and ineligible products are automatically separated during the check-out process. FSA-eligible purchases are then applied to the customer's WageWorks Health Care Spending Account through his or her WageWorks Card, and the customer is asked to provide another form of payment for ineligible products.

"This partnership epitomizes how two like-minded companies can work together to improve the customer experience," said Tim Danison, senior vice president, product and business development, of WageWorks, Inc. "Working with leading retailers such as drugstore.com, inc. is part of our mission to help consumers make the most out of their health care accounts and use their health care dollars effectively."

WageWorks health care accounts allow consumers to pay for eligible medical expenses with pre-tax dollars, giving consumers significant savings on their health care costs. WageWorks customers can access account funds to pay for eligible medical, dental, and vision services, prescription drugs, and over-the-counter products with pre-tax dollars using the WageWorks Health Care Card, Pay My Provider (an automated bill payment service), and the convenient Pay Me Back cash reimbursement feature.

Today over 75 percent of WageWorks Health Care Card transactions are automatically verified using data from WageWorks' comprehensive network of retail pharmacies, vision service providers, health, drug and dental plans, and other point-of-sale systems nationwide, eliminating the need for employees to submit receipts for these transactions.

About drugstore.com, inc.

drugstore.com, inc. (Nasdaq:DSCM) is a leading online provider of health, beauty, vision, and pharmacy products. The drugstore.com(TM) online store provides a convenient, private, and informative shopping experience that encourages consumers to purchase products essential to healthy, everyday living. The online store offers thousands of brand-name personal health care products at competitive prices; a full-service, licensed retail pharmacy; and a wealth of health-related information, buying guides, and other tools designed to help consumers make informed purchasing decisions. Consumers can personalize their shopping experiences with shopping lists, e-mail reminders for replenishing regularly used products, and private e-mail access to pharmacists and beauty experts for questions.

drugstore.com, inc. has been awarded the Verified Internet Pharmacy Practice Sites (VIPPS) certification by the National Association of Boards of Pharmacy (NABP) as a fully licensed facility exercising competent, safe pharmacy practices in compliance with federal and state laws and regulations.

About WageWorks, Inc.

WageWorks, Inc. is a leading provider of consumer-friendly accounts for flexible spending (FSA), health reimbursement (HRA), health savings (HSA), dependent care and transportation that enable employees to pay for eligible expenses with pre-tax dollars. WageWorks tax-advantaged accounts are delivered on a single platform with built-in debit cards for health care and transit and convenient account management tools such as electronic bill payment, cash reimbursement and transit pass home delivery services. WageWorks offers employers the only complete solution in the market, reducing their involvement in plan administration, while maximizing plan participation and value for employees.

Clients include ABN AMRO, Ernst & Young LLP, FleetBoston Financial, Nordstrom, Pitney Bowes, State of Illinois and the Smithsonian Institution, among many others. WageWorks is headquartered in San Mateo, California, with offices in New York, Washington, D.C., Chicago and Dallas. For more information, please visit www.wageworks.com, email at info@wageworks.com or call 866-602-3887.

Contacts


drugstore.com
Greg French, 425-372-3242
gfrench@drugstore.com
or
Edelman for WageWorks
Jessica Heine/Dewey Hammond
415-486-3234/415-486-3211
jessica.heine@edelman.com
dewey.hammond@edelman.com

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