Banks Offer Health Savings Accounts to Meet Customer Demand

Published May 1, 2008

Customers have been asking financial institutions for Health Savings Accounts (HSAs), and according to a survey conducted by Wolters Kluwer Financial Services (WKFS), banks and credit unions are beginning to respond to those requests.

Experts say the increased demand comes from consumers who want more control over their health care.

“You’re calling the shots,” said Greg D’Angelo, a policy analyst with The Heritage Foundation’s Center for Health Policy Studies. “You’re deciding what services you’re obtaining and what the terms are. It’s more transparent. You’re actually seeing where the money’s going. You’re more involved. It’s more market-based in that sense.”

Of the 1,200 financial institutions that responded to the WKFS survey, 62 percent offer HSAs. One-third of the rest plan to begin offering them before this summer.

Benefit Consumer, Banker

The financial institutions surveyed told WKFS they are offering HSAs because of increased consumer demand and because HSAs generate new accounts, boost cross-selling opportunities, and increase revenue.

“Banks and credit unions know HSAs present them with a significant business opportunity and additional way to better serve their customers,” said Dave Roy, vice president and general manager for banking at WKFS, in a news release.

“But it’s also evident that this market is still relatively untapped,” Roy noted, “and the greatest potential lies ahead, especially as health care costs continue to climb and consumers look for more effective ways to save and finance those costs.”

Need for Consumer Awareness

But HSAs have not yet established themselves as a permanent fixture in the health payment realm, D’Angelo said.

“While HSAs are growing in popularity with financial institutions, customers are still in the early stages of adoption,” the WKFS news release noted, “which may explain why customer demand is cited as both the number one reason institutions began or have not yet begun offering HSAs.”

D’Angelo explained the novelty of HSAs frightens some potential consumers away. Some people fear experimentation with new ways to pay for their health care, so they approach HSAs with caution. Others haven’t yet grown used to asking questions about how much health care costs.

The survey reported 69 percent of financial institutions have 100 or fewer HSA accounts. Only 84 responding institutions have more than 500.

Helping Drive Change

HSAs may relieve part of the crunch of today’s health care market, but they’re not the ultimate solution, D’Angelo contends.

“HSAs are a consumer-driven product, an important component for the consumer-driven system, but they are a product, not a model,” D’Angelo said. “We need more of a fundamental transformation in the system.”

Nevertheless, D’Angelo believes HSAs might help drive that more fundamental change–which the WKFS survey suggests may be coming soon, as both customers and their financial institutions are beginning to warm up to HSAs.

Jillian Melchior ([email protected]) writes from Michigan.

For more information …

Wolters Kluwer Financial Services news release: