Health Savings Account Blog

Banks benefit because HSAs attract customers and deposits can be used for everything from mortgages to car loans.

LaSalle Bank, for instance, introduced its Health Savings Account a week ago and plans to launch an advertising campaign in January.

"Although the high deductible health insurance plans are not the most prevalent offering today, the research we did indicates that is the direction they will be moving," said Diane Berner, senior vice president in charge of the bank's consumer deposit product management.

Created in 2003, an HSA allows individuals and employers to set aside money before it's taxed to pay for doctor, hospital and other medical bills. Unlike flexible spending accounts, the money in HSAs can be rolled over year after year. The money earns interest or can even be invested in mutual funds and remains with the holder through job changes and retirement.

Having the money available allows individuals and employers to buy a less-costly, high-deductible health insurance policy to cover expenses once they exceed at least $1,000 for a single person and $2,000 for families.

It can be a way for individuals to find more affordable health plans for themselves and their families and can be an alternative for employers who want workers to share more of the ever-growing costs of health coverage.

Berner anticipates LaSalle will see some interest from individuals and small-business customers in the first part of the year with a flurry of interest toward the end of the year when companies go through open enrollment for 2007 coverage.

"We have had quite a bit of interest, especially recently," she said. "Definitely there is some pent-up demand."

Blue Cross Blue Shield of California partners with Wells Fargo Bank on its Flexible Blue HSA product.

Employers and employees can work with any bank they want to, but there are advantages to using Wells Fargo, explained Don Whitford, director of product development at BCBS.

BCBS members have access to Wells Fargo investment and lending products, for one.

Employers make pretax payroll deductions directly to Wells Fargo. If an employee chooses to use a different account, the money is not automatically deducted and individuals have to reconcile it on their taxes at the end of the year.

A big attraction to BCBS in deciding to team with Wells Fargo is that the bank requires customers keep only $100 in cash in their accounts and everything above that is invested. Other banks require much higher cash balances -- typically $1,000 or more -- before they will invest it.

"That can take years to build up," Whitford said. "If you think about it, as a member, you're two concerns are 'How much do I have to have in this cash account before I can invest and what are my investment options?' Wells Fargo has six options from conservative to risky."

Blue Cross Blue Shield Association earlier this month announced plans to start its own bank to manage members' health savings accounts. Only one health insurer -- United Health Group Inc. -- has formed its own bank, called Exante.

Whitford said Blue Cross Blue Shield is working with the association in creating the bank, but has not committed to joining it.

"We have to wait and see how it fits into the market and evaluate it," he said.

To set up an HSA, a customer must have a qualified high deductible health insurance plan. It is the bank's responsibility to make sure customers understand that requirement but not to enforce it.

"The burden is on the customer to know what kind of insurance they have," Berner said. "We don't require that potential customers prove they have a high-deductible plan. Banks are not required to be the HDHP police."

Because of the extra reporting requirements, LaSalle charges a $25 fee to customers to maintain an HSA.

The number of banks offering HSAs appears to be relatively small, but it is expected to grow considerably over the next year or two, as more and more employers adopt consumer-directed health plans that typically include health savings accounts.