At a previous stop, Miller took on role of setting up and administering the health savings and flexible spending accounts and quickly realized how little people knew about these kinds of accounts. “A lot of the communication came in the form of handouts and there were really no explanations on how to use the FSA or HSA. None of the retailers out there were really helping with product eligibility questions or anything around that,” he recalled.
His research revealed to him a startling discovery: people were forfeiting in the neighborhood of $400 million in not knowing how to use these funds. This made Miller realize there was a huge niche and an opportunity to start e-commerce sites where people could directly buy FSA and HSA-eligible products. Health E-Commerce recently added Well Deserved, a direct-to-consumer shopping site that aims to make wellness rewards shopping easier to its portfolio.
Miller spoke with Chief Executive about the healthcare industry’s ongoing challenge to controlling costs, competing with Amazon and more. Below are excerpts from this conversation.
What’s the big challenge in healthcare these days when it comes to controlling costs?
You hear a lot about cost transparency and health insurance and you don’t hear as much about FSAs and HSAs. Take FSAs, for instance, I mean the fact that there’s a 20% adoption rate…so everyone’s who’s offered an FSA, one in five people are taking advantage.
The total spent each year in flexible spending accounts, tax free, is at $24 billion, so we estimate, if one in five are adopting, there’s a good $90 billion of tax free money left on the table. So, aside from insurance costs rising, people could be putting away tax free dollars to spend on those expenses and they’re not. So that to me is a huge issue.
It’s the same with HSAs, right? A lot of people are getting into HSAs, they have a lot of great features, they’re a triple taxed savings account, you can put in tax free, you can grow your funds tax free, you can take them out for medical expenses, tax free. But there’s still three in five people that have this eligible plan that don’t use the HSA. So I think that there’s really an awareness question. There are 110 million who have access but don’t enroll. So those are some really large numbers and when you kind of add it up, it’s a pretty big waste.
Why is that happening? I think people view it as a sideline benefit. I think employers provide complex information about these type of accounts. I don’t think the retailers are really helping define what’s covered in the stores and online like we do, and even brands, we’re onboarding a hundred brands this year of different products that are covered, and some of these brands didn’t even know this is an option. Like, L’Oréal. They’re like, “What’s this?”
Is this educational aspect the biggest challenge that you guys face?
I think there are three challenges that we face. Yes, one of the biggest ones is making people aware. I think a lot of times people overlook these accounts, and I think just an awareness around what the benefits truly can be. I mean, when you actually add it up, right, you’re talking about FSA, you’re talking about HSA, you’re talking dependent care reimbursement up to $5,000 a year, and then also transportation, that all falls under the FSA category. And so that adds up. I mean that could be almost $10,000 a year in tax free savings.
So I think really making people aware of that I think is a big challenge and we’ve made some great strides into making people aware and using the site. And I think that that’s something that we’ll consistently try to do is make them aware and make it simple.
Another challenge is there’s not a lot of visibility into the products and services that are covered. And back in 2010, that really took a turn because half the products that were originally covered became only covered with prescription. And a lot of people are like, “Well, what does that mean?” People assume that all products now, all over-the-counter products needed a prescription, when it was only half. So, the 4,000 products we sell on our site, I’d say about 3,800 of them are fully eligible without any need for a script.