Banks gearing up for health savings account boon
■ Financial institutions increasingly are offering HSAs to cash in on a projected $75 billion industry.
By Jonathan G. Bethely — Posted Dec. 4, 2006
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Financial institutions are jumping on the health savings account bandwagon in a hurry.
Nearly 1,100 banks now offer a health savings account, more than three times the number at the end of 2005, according to Information Strategies, a Ridgefield, N.J.-based marketing firm targeting small businesses and operator of HSAFinder.com, an HSA information site.
JoAnn Laing, president and CEO of Information Strategies, said that although larger banking institutions have jumped into the fray, the real growth is happening in smaller banking institutions such as credit unions and regional banks.
"They're starting out small with just a checking account and rapidly building with a credit/debit card or an investment option," Laing said.
The AMA supports HSAs as a way to empower patients to have greater control over their health care decision-making and encourages employers to offer HSAs as one of several insurance options to employees. AMA policy supports innovative approaches to health care coverage, including consumer-driven health plans such as HSAs.
According to America's Health Insurance Plans, more than 3 million Americans have enrolled in HSA policies that combine HSAs with high-deductible insurance plans, triple the number covered in 2005. Employer group coverage is the fastest-growing segment for HSA products, which have grown from 20% of the HSA market in September 2004 to approximately 60% in January, according to AHIP.
Industry experts predicted a growth spurt in the world of HSAs to the tune of nearly $75 billion in tax-free deposits. Chicago-based consultants Diamond Cluster International issued its prediction in a 2005 report that assumes 10% of privately covered lives will be enrolled in HSAs, a total of 15 million to 25 million consumers.
With those kinds of numbers, financial institutions are scrambling to get a piece of the market. Bank of America announced a partnership with Aetna to introduce a new credit card that converts usage points into cash in a member's HSA account. J.P. Morgan Chase will start allowing people to sign up for HSAs online.
South Windsor, Conn.-based Rockville Bank is another bank that jumped head-first into the HSA business in October to capitalize on the tremendous growth potential. "It's a stable source of dollars, and we did have an interest [from customers]," said Richard J. Trachimowicz, senior vice president of retail banking at Rockville.