Offering HSAs Can Strengthen Member Relationships and Generate Income, ‘Discovery’ Attendees Told
June 22, 2006 LAS VEGAS – As company-provided health care plans continue to raise premiums and provide less coverage, it is imperative credit unions offer members alternative ways to manage health-care costs, a panel of experts told attendees Thursday at CUNA Mutual’s Discovery Conference.
A record 1,200 credit union participants are attending CUNA Mutual Group’s 2006 Discovery Conference, which is a hands-on conference for credit union leaders. The event is being held at the Wynn Las Vegas through Saturday.
Health Savings Accounts (HSAs), which were signed into law December 2003, are emerging as the preferred option because they help individuals manage current health-related expenses, while also building for future medical needs, said Lon Sprecher, CUNA Mutual senior vice president, Employee Benefits products.
“HSAs operate much like IRAs in establishing a savings account, and while the dollars can only be used for qualified medical expenses, it is pre-tax money that helps a member pay for services not covered by their current health plan,” said Sprecher. “It is also a key way that businesses, including credit unions, can help control health care costs.”
At year-end 2005, there were more than 1 million HSAs nationwide with close to $1.2 billion invested. Expert predictions indicate there will be more than 25 million HSAs and more than $35 billion invested within seven years.
“HSAs were created to help stem the rising cost of health care and, as an added benefit, many employers for the first time can afford a health care plan for their employees,” said Tim Straub, operations manager for CUNA Mutual IRA Services. “Research from America’s Health Insurance Plans (AHIP) found 37 percent of those starting HSAs were previously uninsured.”
Straub noted if a person contributed $2,000 annually to an HSA and used only half each year, they could have more than $24,000 saved within 15 years based on a 6 percent return or almost $44,000 if they used only ten percent of their contribution.
While HSAs provide credit union members a valuable opportunity for health-care coverage, credit unions also benefit. CoVantage Credit Union, Antigo, WI, $529 million in assets, saw the advantage of HSAs early on and began offering them to members and staff in January 2006. The credit union program has no fees and an above average interest rate, which Paul Grinde, CoVantage executive vice president, said is consistent with the credit union’s philosophy.
“Health Savings Accounts provide significant business opportunities for credit unions as well as the opportunity to reduce health insurance costs for a credit union,” said Grinde.
Beacon Credit Union, Wabash, IN, $551 million in assets, offered HSAs in October 2005, and conducted research to make sure it offered the best pricing in the market. Dan Schoenherr, executive vice president of Solidarity Community Credit Union and formerly of Beacon CU, said all branch managers and loan officers were trained, and an important move was enlisting the competition.
“Establishing relationships with insurance agencies in the market may be a critical factor in the success of many HSA programs,” said Schoenherr. Beacon CU contacted all independent insurance agencies in the area and developed relationships with 10 of them.
One of the first data processors to get in on the HSA movement was Fiserv. The Brookfield, WI company realized the growth potential and that not all credit unions would have the technology or the staffing to roll out a program.
“By integrating with our core system we are able to provide HSA-management from member enrollment through claims review,” said Joe Barry, president of the Fiserv Credit Union Group Eastern Region. “We felt time-to-market was important for HSA technology because of the potential to help credit unions attract new deposits and strengthen and expand member relationships.”
The panelists all agreed the future of HSAs is unlimited, but that it is just one component of softening health care expenses. Credit unions should also consider Flexible Savings Accounts (FSAs), Health Reimbursement Accounts (HRAs) and Medical Savings Accounts (MSAs).
CUNA Mutual’s Discovery Conference 2006, “Ideas. Inspiration. Innovation,” offers more than 70 learning sessions filled with practical, action-oriented information. Discovery 2007 will be June 20-23 at the Gaylord Opryland Hotel in Nashville.
CUNA Mutual Group is the leading provider of financial services to credit unions and their members worldwide. More information on the company is available on the company’s Web site at www.cunamutual.com.