Health Savings Accounts (HSAs) are quickly becoming the primary health payment account for many health care insurance participants, and one day soon may displace Flexible Spending Accounts (FSAs) as the dominant system of payments for the private health market. High Deductible Health Plans (HDHPs), a required plan for HSA contributions, are increasingly popular with HR benefits managers and corporate finance department: insurance premiums are more affordable for both employer and employee, who split the bill, essentially, while the health care consumers are encouraged to comparison shop, from doctors, medicines, and lab tests, to just about everything else.
And nowadays if we are shopping around, where do we end up? Amazon.
Amazon may not be welcomed by all.
Not surprisingly, Amazon is making a big push into health care. At the beginning of 2018 Amazon announced a collaboration with Berkshire Hathaway (Warren Buffet’s investment firm) and JPMorgan to reinvent health care. A few months later Amazon acquired PillPack, an online pharmacy with operations in all 50 states. A few weeks afterwards Amazon hired Atul Gawande, celebrated NYT best selling author and specialist surgeon, to lead their health care initiative.
Amazon is serious.
But their aspirations don’t need to be that ambitious. Consumers have been swiping FSA cards at CVS and Walgreens for years, and more recently their HSA cards. Why not move those payments into an online checkout process? That is exactly what is happening, as CVS and others are seeking to tap into the qualified medical expense segment of the internet economy.
Inside knowledge of Amazon’s long-term strategy is not critical.
Amazon may not be welcomed by the established players, however. Amazon scares every other retailer in the other segments of the economy they have entered. And for good reason. No longer satisfied with dominating books and the publishing industry, Amazon is now the first and often last place the consumer looks when shopping online. Amazon’s acquisition of Whole Foods suggests little may beyond their ambition.
Amazon’s customers may have recently noticed a new feature that allows them to select payment from their HSA or FSA card during the checkout process. By accepting HSA/FSA cards and accounts money transfers they are poised to be a big player in the over the counter medical expense space.
No doubt Amazon won’t stop there. Might they decide to offer an Amazon-branded HSA card, much as they have with the Amazon credit card? Certainly the dollars running through the medical system will quickly make them a player in whichever field they choose to enter. Amazon may soon notice their economic scale makes this an attractive opportunity, and perhaps complementary to their push into health care more broadly.
But inside knowledge of Amazon’s long-term strategy is not critical to today’s health care consumer. Next time you think about purchasing health related items and find yourself on Amazon, be sure to click through the pay options. Your FSA/HSA card may be even more useful than you thought — and you don’t even need to leave your home, or Amazon’s website.
Aaron Benway, CFP, EA
Aaron is a Certified Financial Planner (CFP) and IRS Enrolled Agent (EA). He co-founded HSA Coach, a digital tool to educate consumers on HSAs, track health expenses and other documents, and provide individual financial calculators, to help consumers get the most from their HSA and other savings. To help individuals directly with their financial planning and wealth management requirements he founded AB Financial Planning. Prior to co-founding HSA Coach, Aaron was the CFO of ventured backed fintech startup HelloWallet, acquired by Morningstar. Aaron has an MBA from Harvard Business School and holds an electrical engineering degree from the US Naval Academy.