The increasing expense of healthcare is making it more difficult for employers to provide low cost, full coverage health insurance. To meet the stipulations of healthcare reform, many businesses will choose to offer their employees a High Deductible Health Plan. Credit unions are well-positioned to offer these employees a tax-advantaged health savings account — or HSA — for medical expenses. HSAs offer several opportunities to credit unions as well as members, including:
The PFI Advantage: HSAs are not unlike the demand deposit accounts credit unions already offer. There’s a “transactional” advantage in how members bank, says Kent Hartzler, CEO of Mennonite Financial Federal Credit Union (now called Everence Federal Credit Union). Through their delivery channels (branches and ATMs), payment systems (debit cards and checks), and support resources (call centers), “credit unions are positioned to…take the heartburn out of becoming familiar with an HSA.”
Tracking and Reporting Advantages: Credit unions must submit HSA annual reports and provide employers an efficient way to track spending; however, they do not monitor member usage and are not responsible for determining if expenses are related to healthcare. “That’s between the member and the IRS,” says Hartzler. Some HSA-linked debit cards offer the capability to decline point-of-sale purchases at non healthcare-related locations, which encourages members to use funds properly.
Membership Advantages: HSAs are an acquisition tool for SEGs, but they also appeal to individuals. According to a survey by America’s Health Insurance Plans, 52% of individual market enrollees are 40 or older. This group is known for its financial stability and offers the potential to cross-sell products such as loans and investments. “If someone handles their HSA account properly, you’re probably looking at someone who handles their finances properly,” says Hansel Hart, CEO of Palmetto Health Credit Union. HSAs also are attractive to young, healthy individuals with minimal healthcare expenses. In 2010, 20.7% of HSA holders in Wolters Kluwer Financial Services’ annual survey were 25 or younger.
Community Advantages: According to the American Journal of Medicine, more than 60% of bankruptcies in 2007 had an underlying medical cause. As more employers move toward HDHP plans, helping members save for medical costs not only protects their financial health but also shields their financial institution from potential loss. In this respect, the not-for-profit structure of credit unions allows for better rates, higher returns, and more affordable HSA services than competing financial institutions.