HSAs Offer Options For FIs, Issuers, Processors & Consumers

Implications: Key Implications:
Health Savings Accounts (HSAs) and HSA Cards are gaining in popularity and has become the preferred method for accessing HSA dollars.  Due to an increase in employer health care premiums which increased by over 9% in 2005, employers are increasingly offering HSAs to offset higher insurance premiums, while offering employees the option to earn interest on HSA accounts and to pay for medical expenses on a pre-tax basis.

1.  HSAs are an attractive tool for FIs (Financial Institutions), issuers, payment processors and consumers, because HSAs combined with debit cards and/or credit cards allow consumers to access funds to pay for medical expenses and deductibles, while also allowing consumers an opportunity to invest in mutual funds, and other investment products and to earn rewards points based on account balances.

2.  Trends show HSAs are a growth opportunity for FIs, issuers and payment processors, who can offer consumers a competitive option to their employer HSA Plan, while offering investment products, lower setup and maintenance fees and the ability to load multiple purses (multiple accounts) on a HSA Card).

3.  Payment processors such as First Data and Metavante has seen an interest and opportunity to provide transaction services for issuers and FIs to process HSA Cards, in addition to offering multi-pursing solutions and back office infrastructures which allow FIs, issuers and payment processors the ability to utilize existing magnetic strip technology to load multiple purses on HSA Cards, which builds brand loyalty with the consumer and employers adopting FIs Health Savings Plans.


Analysis: Comments/Perspective:
Some of the dominant players in HSAs is Chase, Keycorp, BB&T, Bank of America, UMB Bank and others.  First Data and Metavante are the top payment processors of HSA Cards and offer the technology and infrastructure to use existing technologies to drive costs down for administration of HSAs. 

Additionally, its makes good business sense for FIs to take advantage of this opportunity to build new accounts, offer additional products and services to HSA account holders, while building their brand and loyalty amongst HSA customers, during a time when FIs are grappling with fickle consumers shopping the market for the most competitive plan which offers an interest bearing HSA account, low fees and the ability to earn rewards points. If FIs can set themselves apart from their competitors, consumers of HSAs and employers who administer the plans will be reluctant to switch to another card issuer.