SKU-Level Data Helps Consumers Avoid Losing $4 Billion in Healthcare FSA Funds, Banyan Says

Call it the $4 billion year-end problem, plaguing consumers and the healthcare industry like clockwork.

That’s the amount of money that disappears from flexible spending accounts (FSAs) every year as the “use it or lose it” feature of FSAs kicks in.

There’s a rush as patients figure out what’s eligible, and it’s a conundrum that individuals and households face when deciding how to allocate their pre-tax dollars to pay for their own and their dependents’ healthcare expenses. They’ve funded the accounts, and the hard part is spending that money the right way.

The confusion is compounded at the register, where patients must be careful to put their healthcare spending into buckets — using their FSA accounts for some items, and their credit and debit cards for others. The paperwork is onerous, and juggling receipts can be daunting.

Banyan President Alpesh Chokshi noted to Karen Webster in an interview that a new collaboration between loyalty program Bilt Rewards and Walgreens — underpinned by Banyan’s platform and receipt-level data — can help eliminate the friction and waste surrounding FSAs and healthcare savings accounts (HSAs).

The positive ripple effects are considerable. Consumers get greater convenience and savings on the healthcare-related items they need; Bilt and payment cards gain increased spend engagement; and Walgreens boosts its sales and customer experience.

To cut down on the confusion and frictions of juggling separate FSA and HSA cards and credit cards, as well as submitting receipts, Bilt expanded its loyalty rewards program via a collaboration with Walgreens to maximize wellness benefits.

Through this joint retail and financial service effort, powered by the Banyan platform, Bilt members have exclusive access to Automatic Healthcare Savings, a seamless way to apply FSA and HSA benefits when shopping at Walgreens using any card linked to their Bilt account.

In terms of the mechanics, Bilt members shop at Walgreens for everyday items using any card linked to their Bilt account, earning Bilt Points on their spend. Within 72 hours, Bilt notifies the member of any eligible FSA or HSA items, and they can choose to apply their FSA or HSA funds to those items in the Neighborhood > Pharmacy tab of their Bilt account. Bilt then credits the original payment method and charges the FSA or HSA card for the eligible amount.

It’s an automated way to access healthcare spending account funds, Chokshi said. It uses the capabilities of item-level identification and rewarding. The partnership also offers rewards for prescriptions, which in turn makes cards stickier and top-of-the-wallet for many users.

Chokshi said consumers coming into Walgreens as Bilt Rewards members get automatically rewarded on every purchase, including double points on Walgreens branded products.

The platform model gives Walgreens, and by extension other merchants and issuers, the “degrees of freedom” they need to monetize their various commerce experiences and higher-margin products, Chokshi said. That’s important given the fact that, as Chokshi said, “the rewards game is tapped out” with interchange largely given back to consumers in the form of rewards. So, merchants must find new ways to create value, monetize their data with consumers’ permission and offer item-level rewards.

Brands that want access to consumers will pay a premium to expose those individuals to a coupon or experience that uses item-level transaction details to personalize those offerings. We’re not far away from a world where, for example, manufacturers of a particular brand of toothpaste can offer “double” rewards to Walgreens’ customers automatically, he said.

“You’re tapping into another pool of funds as opposed to a [merchant’s] marketing fund or credit card reward loyalty fund — and for the manufacturer, that’s a trackable and easy way to see the ROI versus a broad-based rewards program,” Chokshi said.

The fact that the Walgreens and Bilt healthcare spending collaboration has gone live using the Banyan platform, Chokshi said, “will open up more opportunities” for item-level data-powered use cases.

Banyan, he said, is looking toward a launch with a major co-brand partner in the next year that can offer more tailored rewards for different types of spending. The Walgreens and Bilt model can be applied in other controlled spending areas such as the Supplemental Nutrition Assistance Program (SNAP), Electronic Benefits Transfer (EBT) and Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

“It’s exciting to be eliminating the frictions [in healthcare spending],” said Chokshi, adding: “This is putting money back in people’s pockets that they might have lost otherwise.”

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