Banks, Consumers Build Support for HSAs
Banks have begun to offer HSAs in "a bid to attract deposits and continue to expand their menu of financial services," the Tennessean reports.
As of March, U.S. consumers had opened 1.65 million HSAs with about $2 billion in assets through 40 separate administrators, according to estimates by Inside Consumer-Directed Care. By 2012, assets in HSAs likely will reach $35 billion, according to Forrester Research.
In addition, at least 20% of consumers with private health insurance will have HSAs or other consumer-driven health plans by 2010, according to Carlton Doty, a senior analyst for Forrester.
The Tennessean reports that the "hope of banks is as the accounts grow, the banks would be able to offer other investment services to account holders, who can specify that their health savings money be invested in different ways."
Craig Keohan, president of First Horizon MSaver, said, "Banks are interested in garnering new customers, and with new customers come new deposits."
However, banks are "meeting reluctance from some employees because they lack understanding about potential benefits of HSAs and have concerns about customer service," the Tennessean reports. In addition, "more of the health plans that have hired banks as administrators are now chartering their own," the Tennessean reports.
The Blue Cross and Blue Shield Association in February received approval to open the Blue Healthcare Bank, which will offer HSAs (Ward, Tennessean, 4/5).
New rules for HSAs "are making them more attractive to consumers, who can use HSAs to help reduce health insurance costs now and, potentially, in retirement," the AP/Hartford Courant reports.
In the past, contributions to HSAs could not exceed the amount of the annual deductibles for the health plans to which they are linked.
The new rules -- outlined in IRS Publication 969, titled, "Health Savings Accounts and Other Tax-Favored Health Plans," -- increased the maximum annual contribution to HSAs to $2,850 for individuals and $5,650 for families. In addition, the new rules allow a one-time transfer of funds from health reimbursement arrangements and flexible spending accounts to HSAs and a one-time transfer of funds from individual retirement accounts to HSAs without a tax penalty.
Hugh Bromma, chief executive of Entrust Group, a retirement plan administrator, said, "This means the money accumulates tax-free and, if you don't use it, it's terrific savings." Bromma added, "So if you can, why not have both a retirement account and an HSA?" (Alt Powel, AP/Hartford Courant, 4/4).
Julie Goon, special assistant to the president for health care economic policy, on Tuesday in an "Ask the White House" online chat discussed HSAs and the Bush administration health care agenda. A transcript of the chat is available online.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.