Make HSAs More Than “Another Account”

How can credit unions provide affordable health savings accounts and protect long-term profitability and sustainability?


The different models credit unions utilize for health savings accounts vary by their region, their business relationships, and their overall role within the community. But one thing remains consistent.

To effectively offer HSA services, credit unions must look beyond single account growth and encourage account holders to adopt a more holistic financial relationship. Credit unions that already offer HSAs demonstrate several approaches to accomplish this.

“If we were getting into HSAs today, we would need to do our homework on how to generate enough revenue to make the move beneficial for the credit union as a whole, as opposed to just a beneficial service to members,” says Hansel Hart, chief executive officer of Palmetto Health Credit Union ($53M, Columbia, SC). The credit union has approximately 2,200 HSA accounts; it boosts enrollment by working with its main sponsor, the Palmetto Health Hospital System.

“Its all about the relationship,” affirms Joe McGowean, director of marketing and member communication at Alliant Credit Union ($7.2B, Chicago, IL). Alliant has an on-board process for employee groups that use its health savings accounts. “During our conversation we want to make sure it is clear, this is a member relationship, it’s not just the HSAs,” McGowean says. “We look forward to serving your employees, but let’s look at getting the whole financial picture for them.”

Although HSAs do generate income, their average monthly fee is $4-6, their true value is the potential they create for cross-sales and higher earning relationships. Many credit unions draw HSA holders’ attention to affordable loans, but there are other avenues to consider.

“Depending on your balance and your HSA account,” McGowean advises, “you can also have access to investment services.”

In such a relationship, the member would have service options, such as the ability to purchase stocks, bonds, and mutual funds, that are more akin to a brokerage account than a typical deposit account.

Mennonite Financial Federal Credit Union ($120M, Lancaster, PA) increased its HSA accounts by transferring them from a non credit union, Mennonite-focused provider of insurance and financial services, Mennonite Mutual Aid (the two institutions have merged under the new name Everence Federal Credit Union). Mennonite Financial now holds approximately 4,400 accounts or $11.2 million in investments. The merged business relationship creates a myriad of new earnings opportunities under the canopy of a single brand.

“HSAs could be the entry point into any number of banking relationships,” says Mennonite Financial’s chief executive officer Kent Hartzler, citing financial advising and retirement planning as two opportunities.

For the credit union, the boost to its HSA accounts generated $1.6 million in “other than HSA deposit relationships” over the course of one year, Hartzler says. Standard fee income for these accounts is minimal, but they have generated an estimated $12-15,000 in HSA debit interchange. Its online self-service platform also allows the credit union to keep retail delivery costs down and keep the program affordable.

Some credit unions use HSAs to cross-sell and up-sell other services. Others use HSAs to generate larger business relationships. Whatever your credit union focus, a strong income strategy for HSA accounts allows the credit union to meet members’ needs more effectively without risking the balance sheet.