Both banks and credit unions are rolling out Health Savings Accounts (HSAs),
new medical savings accounts that debuted this year following their inclusion
in the Medicare Prescription Drug Improvement and Modernization Act. While two credit unions, HealthAmerica ($78 million in assets) in Jacksonville, FL, and Mid American ($121 million in assets) in Wichita, KS, are offering these accounts today, about 20 banks have signed on as HSA administrators, including J.P. Morgan Chase, Wells Fargo and Mellon Financial.
What is their interest?
HSAs offer a long-term deposit base much like IRAs, as well as transaction activity.
They are expected to grow in popularity among employers and consumers as healthcare
costs continue to rise.
HSAs are offered as part of a high-deductible, low-premium health insurance
plan. Individuals with deductibles of at least $1,000 and families with deductibles
of at least $2,000 are eligible to open one. Once established, funds can be
deposited tax-free for medical expenses including prescriptions. Up to $2,600
can be deposited per year by an individual and up to $5,150 can be deposited
per family. There is no requirement to use the deposited amounts in one year,
so unused funds are rolled over into the next year. Because they are held in
an individual’s name, these accounts remain with them regardless of changes
in employer or employment status.
Two Models for Offering HSAs
Financial institutions are pursuing two paths in launching HSAs. Large players
like Chase and Wells are pursuing partnerships with insurers such as Anthem,
WellPoint, Cigna and regional BlueCross BlueShield networks. About 40 insurers
began offering high-deductible plans this summer, and 80 providers are expected
to have such plans in place by year-end. By partnering with insurers, these
large players expect to get the first opportunity to provide HSAs to consumers
covered by their plans.
Smaller institutions are not targeting the insurers directly, but rather the
small businesses and consumers they cover. By providing stand-alone health savings
accounts to individuals who are already covered by a high-deductible plan, these
institutions hope to expand relationships in these market segments.
The two credit unions that are currently offering HSAs see opportunities in
both models. HealthAmerica Credit Union, with a membership base of healthcare
professionals, is exploring partnership opportunities with insurers while Mid
American Credit Union is marketing the account its small business SEGs.
With employers trying to lower their health insurance costs, high-deductible,
low-premium programs will grow in coming years. A recent survey from consultant
Milliman Global indicates that 9 out of 10 health insurers expect to offer high-deductible
plans to employers over the next year. Growing adoption rates should result
in growing deposit bases for those financial institutions that are offering
health savings accounts.
To learn more about Health Savings Accounts, join us this Thursday at 2 p.m.
EST for the webinar, “Opportunities in Implementing
Health Savings Accounts”.