At the intersection of technology, consumer empowerment, and financial decision-making, generative AI is beginning to reshape how people engage with their healthcare benefits. As powerful large language models (LLMs) become more integrated into daily life, they open new possibilities for consumer-directed healthcare (CDH) — making it easier, faster, and more intuitive for individuals to manage their health spending.

For years, consumer-directed healthcare has promised to give individuals more control over how they pay for and manage care through accounts like HSAs, FSAs, HRAs, and other tax-advantaged benefit vehicles. Yet the reality for many consumers has been anything but simple. Questions like:

• “Is this expense eligible?”
• “How much is left in my FSA?”
• “Should I pay out-of-pocket or use my HSA?”

… still result in confusion, calls to service centers, or worse, benefits going unused.

Gen AI changes that by placing intelligent assistance at consumers’ fingertips. It brings conversational, always-on support that can interpret complex information and deliver human-like guidance, instantly.

Imagine a member asking a question like, “Can I use my HSA to pay for my child’s orthodontics?”

With gen AI, the response could be:

• A personalized reply based on the user’s account type and dependent setup.
• A link to relevant IRS guidance, simplified in plain language.
• A real-time eligibility check of the provider and treatment.
• A follow-up prompt: “Would you like to pay from your HSA now?”

It goes beyond traditional customer service by helping consumers navigate their healthcare choices more effectively.

Generative AI can help transform CDH accounts from passive financial tools into intelligent health wallets. For example, AI can instantly classify expenses to determine whether a transaction is eligible or requires substantiation, significantly reducing delays and minimizing rejections. It can also offer smart, personalized recommendations — drawing from a member’s past spending habits, health history, and employer-sponsored benefits — to suggest the most strategic account to use, such as reminding someone to use their FSA funds before they expire.

AI can also deliver just-in-time education by surfacing relevant insights at critical decision points. When a user is about to make a payment, AI might alert them that a particular provider charges 20% more than the regional average and offer to compare more cost-effective options. In short, AI enables real-time financial decision-making, a game-changer in a space where confusion and fragmentation have long been barriers to utilization.

The implications go beyond the individual. Plan sponsors and TPAs stand to benefit from:

• Higher account utilization, leading to more engaged and satisfied members.
• Reduced service center burden, as AI handles a growing share of inquiries.
• Improved compliance, with AI helping ensure eligible use and clean documentation.
• Actionable insights, drawn from aggregated AI interaction data to refine benefits design and communications.

Generative AI has the potential to transform consumer-directed healthcare, but it must be implemented with care. Data privacy and responsible use are essential, especially when health and financial information is at stake. Key considerations include:

• Limit sensitive data inputs: Avoid entering personally identifiable health information into open or public AI tools. Work only with platforms that offer strong compliance, encryption, and security measures.

• Use de-identified or aggregated data: Removing identifiable details helps minimize exposure risk.

• Understand vendor practices: Confirm how AI partners collect, store, and retain information that is entered into their systems.

• Maintain human oversight: AI should support, not replace, decision-making.

• Communicate transparently: Clearly explain how AI is being used, what protections are in place, and what role consumers play in safeguarding their own information.

While generative AI holds immense promise, its real value will be unlocked when it’s deeply integrated into the broader healthcare payments ecosystem. Alegeus is uniquely positioned to embed AI into the core of its technology stack and build on more than 30 years of CDH innovation to provide smarter, more intuitive experiences that help consumers manage healthcare costs.

Generative AI represents far more than a new tech trend. It’s a bridge between consumer empowerment and healthcare complexity. By bringing real-time intelligence, personalized guidance, and financial clarity to the consumer-directed healthcare experience, AI tools can advance the long-promised vision of CDH: putting the power of healthcare back into the hands of the consumer.

Its success, however, will depend not only on the sophistication of the technology, but also on safeguards that protect consumer trust and privacy. Balancing innovation with responsibility will ensure that AI fulfills its potential to reshape healthcare for the better.