Amazon’s move to allow consumers to use their HSA or FSA to purchase thousands of eligible items on its site — from Band-Aids to contact solution and cold medicine — is a smart initiative from the online shopping giant.
It solidifies its footprint in the healthcare realm. From launching their
But last week’s HSA announcement isn’t just a savvy move for Amazon. The retailer’s acceptance of HSA dollars marks an exciting new opportunity for the HSA — one of the most misunderstood and underutilized savings tools in America.
More than half of all Americans who get health insurance through their employer now have a high deductible health plan. With deductibles rising eight times as fast as wages since 2008, healthcare costs have become the No. 1 financial concern for many employees — outranking debt, college expenses, mortgages, rent, retirement savings, taxes and even unemployment.
For these employees, the HSA is one the best savings tools available to them. They can contribute pre-tax dollars, grow those dollars via tax-free investment and pay for eligible medical items tax-free as well.
The problem is that HSAs are vastly underutilized. Too often, they are misunderstood — or simply not understood at all. Seven in 10 employees mistakenly think their HSA is governed by a “use it or lose it” policy, and
By accepting HSA dollars, Amazon is finally giving this untapped savings tool its moment to shine. Every payment method or currency — whether it’s dollars, airline miles, bitcoins or credit cards — depends on reliable large-scale merchant acceptance to become truly mainstream. Amazon already has a captive audience of millions of American consumers looking to make smart choices and save money online, and by helping highlight what the HSA can be used for, Amazon will no doubt raise awareness of its benefits and quirks (did you know you can buy sunscreen with your HSA?). Simply by making it more obvious and convenient to use, Amazon will help mitigate the heavy hurdle of HSA education.
As we think about the future of HSAs, it’s helpful to look to the past. On the whole, we’re moving from a world of defined benefit to defined contribution. This happened in the retirement space in the 1980s when we moved from pensions to 401(k)s, and the same is happening now in the healthcare space. Whereas employers used to offer the defined benefit of a high-coverage PPO, they’re now moving toward HDHPs and seeding employees’ HSAs with a defined contribution each month.
The final burden? Education, convenience and adoption. But as it becomes less burdensome and more convenient for employees to use their HSAs, we’ll see continued growth and utilization. In five or 10 years, we may look back to this time and see that the HSA is to healthcare what the 401(k) was to retirement.
