HSAs are the Heart of Profitable Relationships

Credit unions can use health savings accounts — which are becoming a mainstream healthcare option — to secure, strengthen, or renew SEG relationships and business partnerships.


The corporate banking industry is alert once again. It is regaining lost ground and causing credit union relationships, including those with select employee groups, to rapidly change in nature or disappear altogether. On the heels of healthcare reform, health savings accounts are becoming a mainstream healthcare option. HSAs offer tax deferred earnings and interest that help high deductible insurance plan holders cover initial healthcare costs. Many credit unions are aware of the potential member benefits of HSAs but overlook the strategic value of these accounts for the institution. HSAs boost loyalty among SEGs and offer new business partnership opportunities with local industries.

According to the annual survey by America’s Health Insurance Plans, 10 million people were enrolled in HDHP/HSA programs as of January 2010. This is a 25% jump from the 8 million that were enrolled in January 2009. Large group HSA coverage grew most drastically. According to the survey, it increased by 33%. Small group HSA coverage grew 22% year-over-year from 2009 to 2010.

As premium costs skyrocket and mandated coverage looms, many employee groups are turning, en masse, to HDHPs (high-deductible health plans) and employee-controlled HSAs. Offering health savings accounts to select employee groups with high-deductible health plans is one way to build long-term relationships.

Alliant Credit Union ($7.2B, Chicago, IL) uses its SEG focus, mailing outreach, and presence at trade shows to target health benefits decision makers at area businesses, says Joe McGowean, director of marketing and member communications.

These efforts have garnered the credit union nearly 20,000 HSA accounts and $25 million in deposits, with 16,000 new members secured through a single significant SEG relationship.

Credit unions without an employee group focus can buoy individual HSA enrollment by maximizing relationships, partnerships, and sponsorships with other institutions. For example, banks are seeking HSA partnerships. And for smaller financial institutions that want to compete, providing an initial HSA service to businesses can easily lead to stronger relationships in the future.

“I think it may be difficult for a smaller or mid-size credit union to gain [HSA] market share without some form of relationship with an employer base,” says Hansel Hart, president of Palmetto Health Credit Union ($56 M, Columbia, SC), whose own HSA program has grown from approximately 300 accounts to more than 2,200 accounts with more than $2 million in balances.

While implementing some small SEG group enrollment, the key relationship that allowed Palmetto to rapidly grow its program was its sponsor relationship with Palmetto Health Hospital. The credit union received a small initial group of the hospital’s HSA accounts in transfer from another financial institution but has since grown accounts on a largely individual basis.

The credit union works closely with the hospital to reach employees during open enrollment period. It uses presentations and promotional materials to engage employees right where they work. “We have hospital HR and our staff all in one location,” Hart says, “So when questions are asked, everyone’s available to answer.”

After securing the initial relationship through an HSA, credit unions must cross-sell and up-sell services to maintain financial balance. For Palmetto’s cross-selling activities, “the concentration is on mortgage and auto loans,” but Hart says the credit union is still looking for better ways to benchmark relationship development.

“During our [Alliant] conversations [with SEGs], we really want to make sure it is clear this is a member relationship, it’s not just the HSAs,” says McGowean.  

HSAs are not the only approach to maintaining loyalty, but they do provide one way to expand market share among HDHP-oriented employee groups and industries and protect said relationships in the long term.