More Banks Offering HSAs
The number of banks that offer health savings accounts has more than tripled since the end of 2005, as more employees enroll in high-deductible health plans that qualify for HSAs, the Wall Street Journal reports.
Market-research firm Information Strategies found that nearly 1,100 banks now offer HSAs, which allow consumers to set aside money tax-free for medical expenses. Larger banks are "increasingly getting into the business, attracted by the lucrative combination of deposits, account fees and sales leads for mutual funds, and other investments generated by customers," the Journal reports.
According to the Journal, the "abundance of new HSA offerings is triggering competition that is helping to push fees lower and expanding the options for consumers to invest their savings." HSAs typically accrue interest, but banks increasingly are offering other investment options.
Bank of America this week is expected to announce plans to introduce a new credit card in partnership with major health plans that will allow holders to earn rewards points that convert to cash for their HSAs. In January 2007, customers will be able to invest their HSA balances in mutual funds offered by the Bank of America's Columbia Management arm.
In addition, JP Morgan Chase later this month will begin allowing individuals to enroll in HSAs online, rather than solely through their employers. The bank also offers mutual fund investments to its HSA holders.
Experts say the "presence of big banks in the industry is expected to quickly spread awareness and hasten the adoption of HSAs," the Journal reports. The total number of HSAs by the end of 2006 is expected to grow to about 3.6 million with $5 billion in combined deposits, compared with 1.1 million accounts with deposits totaling $1.2 billion at the end of 2005, according to Information Strategies (Carrns, Wall Street Journal, 11/14).