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March 28, 2019

Amazon is now accepting payment from HSAs and FSAs. And that's a big deal, according to industry stakeholders.

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    Amazon is now allowing consumers to use health savings accounts (HSAs) and flexible savings accounts (FSAs), which allow people to use pre-tax income to cover out-of-pocket medical expenses, to purchase certain medical supplies.

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    Details on the program

    Amazon in a statement to CNBC said it is "excited to announce" its new feature allowing consumers to use HSA or FSA debit cards toward certain medical purchases, which the company rolled out earlier this month. "Customers now have the flexibility to use FSA/HSA cards on a wide range of eligible over-the-counter purchases, eliminating the need to pay out-of-pocket or submit receipts for reimbursement," an Amazon spokesperson said.

    For example, Amazon said consumers can use HSA or FSA cards to purchase:

    • Blood glucose monitors;
    • Blood pressure kits;
    • Catheters;
    • Cholesterol meters;
    • First aid supplies;
    • Insulin pens;
    • IV equipment;
    • Over-the-counter contraceptives;
    • Over-the-counter medications, such as cold and allergy medications;
    • Orthopedic supports; and
    • Ultrasound devices.

    The move marks Amazon's latest expansion into the health care sphere. For instance, Amazon last year purchased the online pharmacy PillPack, which presorts and delivers prescriptions to customers in every U.S. state except Hawaii, and coordinates prescription refills and renewals.

    Further, Amazon last year joined forces with Berkshire Hathaway and JPMorgan Chase to form a health care venture named Haven. Not much is known about Haven's plans, but recently unsealed court testimony from Haven COO Jack Stoddard revealed that the venture is focused on redesigning health insurance to make it intelligible to employees and "mak[ing] it easier for doctors to do good care and to spend more time" with patients.

    'A bigger deal than anything Haven's done'

    Mark Bertolini, former Aetna CEO, said Amazon's "move to do HSAs and FSAs through the cloud on [its] site is a bigger deal than anything Haven's done."

    Bertolini said Amazon has made several moves that focus on "getting into the home," which he believes is key to reducing health care costs in the United States. He added, "We can do more in the home around providing services," he said, adding, "You can take care of people's transportation, food, fuel, and socialization in the home, particularly seniors, for cheaper than it is for one or two [emergency department] visits."

    Michael Yang, a health-tech investor with Omers Ventures, said Amazon's HSA/FSA program is "a back end way for Amazon to learn about consumer purchasing behavior of health care products and services, as it moves more deeply into the space."

    Similarly, Stephen Buck, a health entrepreneur who previously worked at McKesson, said the program could be the start of Amazon delving into pharmacy and employer benefits. If Amazon had a pharmacy program, "consumers with high deductible plans and [HSAs] may be more than willing to pay cash for prescriptions using these accounts," he said.

    Clark Howard, a consumer expert, said the ability to use HSAs or FSAs to purchase medical supplies "is really powerful," though he said the people who might benefit from the program the most are those with high incomes. "Unfortunately, only one in five people who are eligible to do an FSA through their employer actually do it," he said (Farr, CNBC, 3/15; Kent, HealthPayerIntelligence, 3/19; Slachta, HealthExec, 3/19; La Roche, Yahoo! Finance, 3/21).

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