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Instacart, DoorDash, Uber target billions in unspent health care savings funds
Grocery Tech Basket: It’s a smart move by the grocery delivery services, considering the billions in spending that take place through these accounts every year.
4 Min Read
Within a few days of one another, both Instacart and DoorDash announced they are or will be—Instacart doesn't start its program until Dec. 4.—accepting HSA and FSA payments. Meanwhile, Uber revealed in its Tuesday earnings call that it, too, will begin accepting FSA payments at the beginning of 2024. / Photo courtesy: Shutterstock
Cold and flu season is upon us, and delivery services are tapping into health care spending with new tech enabling shoppers to use their Health Savings and Flexible Savings accounts. It’s a largely untapped market that leaves hundreds of millions of dollars on the table every year that is ripe for the taking.
Within a few days of one another, both Instacart and DoorDash announced they are or will be—Instacart doesn't start its program until Dec. 4—accepting HSA and FSA payments. Meanwhile, Uber revealed in its Tuesday earnings call that it, too, will begin accepting FSA payments at the beginning of 2024.
It’s a smart move by the grocery delivery services, considering the billions in spending that take place through these accounts every year. The Employee Benefit Research Institute reports that as of Dec. 21, 2021, workers had opened more than 2.4 million FSAs with more than $3.28 billion in contributions, and more than 13.1 million HSAs with assets of approximately $39.5 billion.
These pre-tax contribution accounts are becoming more appealing to inflation-strapped workers searching for ways to stretch their spending dollars. FSAs and HSAs can be a good deal for workers with predictable medical bills, because those dollars that are set aside bypass income taxes.
HSAs, which are generally offered through an employer, have the added benefit of rolling over from year to year, but those accounts are only available to some workers. FSAs are available to everyone, irrespective of the employer, but are less flexible, despite the name. Unlike their employer-sponsored counterparts, FSAs, by and large, don’t roll over to the next year, which creates a use-it-or-lose-it proposition.
The IRS announced on Thursday that next year’s FSA contribution limit is increasing $150 to $3,200, and the allowable rollover amount is a mere $640. The contribution limit for HSAs is set at $4,150 for self-only coverage and $8,350 for family coverage.
The use-it-or-lose it system for FSAs is flawed not only because it results in hundreds of millions of dollars left on the table by workers every year—an analysis by Money.com in 2022 showed that the annual loss could be somewhere around $1.4 billion—it also triggers a flurry of spending, often on unnecessary health care services, because workers don’t want to lose the funds. Who could blame them?
This is where Instacart, DoorDash and Uber come in. Their new capabilities follow in the footsteps of retail giant Amazon, which already accepts FSA and HSA benefits as payment and has created an online portal specifically for eligible products. This is an important tool for workers with HSA and FSA accounts, because the eligibility of health care products is a common source of confusion.
The funds in these accounts can be used for a broad selection of products, including everything from cold and allergy medication to skin care to digestive health. The list of eligible and ineligible expenses is so confusing that news organizations, municipalities and other entities regularly distribute updated lists with headlines such as “Surprising Things You Can Buy With Your Flexible Spending Account (FSA)” and “14 Surprising FSA Eligible Items.”
The lists of guidelines and changes to product eligibility can be a real mess for workers referencing an outdated list or who misunderstand the nuances between similar items that are eligible and ineligible. It’s no wonder that many throw their hands up at the end of the year and let those funds lapse.
DoorDash announced Wednesday that it is now accepting FSA and HSA benefits, but only through select merchants, which again can be confusing for consumers. The delivery service already has 15 major retailers on its roster, though, and on those merchants’ store pages, eligible products are marked with the label “HSA/FSA Eligible”.
The list of vendors includes Albertsons, Bartell Drugs, CVS, DashMart, DGX, Dollar General, Duane Reade, Hy-Vee, Meijer, Rite Aid, Safeway, Walgreens, Winn-Dixie, Vons and 7-Eleven.
“With the launch of HSA and FSA payments on DoorDash, consumers can now get the essential health and wellness items they need, when they need them, and in a way that makes financial sense for them,” said Fuad Hannon, DoorDash vice president of New Verticals, in a statement.
Instacart said Monday that once its FSA and HSA program begins, the benefits will be accepted all of its retailers, eliminating the potential for accidentally purchasing from a vendor and realizing they don’t yet accept such benefits online.
It’s still unclear how this will work with Uber, which said in its quarterly earnings call on Tuesday that FSA, HSA and a number of other forms of payment, such as SNAP (Supplemental Nutrition Assistance Program) benefits, will be accepted through its service in 2024.
However the details shake out with these three delivery services, it makes sense to try to capture these unspent dollars. It’s a win-win for consumers who will find it easier to spend the money that is rightly theirs.
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