Retailers Target Billions In Unused FSA/HSA Funds With Wellness And Beauty Push

Every year, billions of tax-free healthcare dollars go unspent in the U.S., and retailers have set their eyes on them. Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs), intended to offset medical costs, are becoming a major sales target for health, wellness, and beauty brands.

What Happened: Retailers like Sephora, Ulta Beauty Inc. ULTA, and Target Corp. TGT are coming up with tools to assist shoppers in using FSA/HSA funds on eligible items like SPF products, acne treatments, and wellness tech, according to a Retail Dive report.

Online resources, shopping guides, and in-store campaigns are leading the charge. "We launched cash register takeovers and out-of-home placements featuring top eligible items," said Lisa Tamburello, VP at Ulta Beauty.

See Also: Amazon’s Aggressive Price Cuts Hurt Sephora’s US Sales, Says LVMH CFO Cecile Cabanis: ‘We Try To Avoid This Technique

Why It Matters: In Numerator analyst Shawn Paustian's estimation, almost 10%—worth billions—is forfeited each year. Many consumers find it difficult to recognize eligible products. "When presented with a list of eligible items, consumers could only correctly identify less than half," Paustian said.

Retailers identify immense potential in educating account holders, particularly among white-collar professionals who make up most of this market. "FSA/HSA spending in beauty can redefine how consumers think about their routines," said Laura Unger of Sephora.

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