MADISON, Wis. - When it comes to Health Savings Accounts (HSAs) more and more credit unions are making room to offer them to members. For example, CUNA Mutual's HSA program introduced to credit unions in early March so far has over 70 credit unions enrolled and offering HSAs to their members. According to CUNA Mutual IRA Compliance Manager Dennis Zuehlke, that demand is being fueled in part by growing interest from the general public as more businesses begin to offer high-deductible health plans (HDHPs) to their employees. HSAs are tax-free savings accounts that can be used to pay for medical expenses including prescription and over-the-counter drugs incurred by individuals, spouses or dependents. The annual deductible must be at least $1,000 for individual coverage and at least $2,000 for family coverage. Unused HSA money rolls over from year to year and can then be used to pay for medical care up to the plan's deductible. For 2005 the maximum annual HSA contribution of any eligible individual with self-only coverage is $2,650 and $5,250 for family coverage. In addition the catch up contributions for individuals who are 55 or older is $600. The maximum annual out-of-pocket amount for HDHP self coverage is $5,100 and $10,200 for family coverage. Zuehlke says there have been three levels of interest - credit unions that have read about HSAs and are investigating whether they need to offer it; credit unions that are receiving inquiries from individual members with high deductible plans who want to know if the CU offers HSAs; and direct contact from small businesses or business sponsor companies looking to switch to a high deductible plan and wanting to have the HSA component at the credit union. "Credit unions considering offering members HSAs need to look at where their interests are coming from," said Zuehlke. "If you look at what's happening in the HSA marketplace, by 2004 there were a total of 438,000-346,000 of those were individual plans, 79,000 small group and 13,000 large group plans. We anticipate we'll see that growth continue." Zuehkle says with the majority of major health providers offering HDHPs, HSAs are more likely to succeed than their predecessor - the archer medical savings account program-which only had a few providers. He adds that there are a number of benefits for credit unions in offering HSAs. "It is a new source of deposit growth. Unlike other changes in tax law this is creating a product that has not existed before and is a totally new account," said Zuehkle. "It is easy to administer the program-credit unions don't have the burden of substantiating medical expenses; it is up to the member or employee to determine if that is an expense that is covered. There is also the income potential that may exist if a credit union is looking at this as being a transaction type account by attaching a check writing and debit card feature, and more importantly it helps enhance relationships with SEGs and small businesses. Consider it offering another piece of the pie that members don't need to turn to banks for." He adds what's been a concern for many credit unions is that HSAs are so new that many are in the phase of reading about it and studying it to make sure it is something that members really want and are going to use. He says it is indeed important for credit unions that do opt to offer HSAs to understand it is something that takes time. "Before offering this they have to really identify the market and they have to realize this is something that will take off slowly," said Zuehkle. "We've seen some credit unions that initially are more successful. For example if they have a field of membership where a high percentage of its members are federal employees then you may see a greater adoption of HSAs. That's why they have to look at the level of interest from individuals, SEGs - the whole picture." He says simplicity and easy access are two of the reasons why there has been an increased volume of credit unions signing up for the CUNA Mutual HSA program. From providing all operational forms needed to manage an HSA program; toll-free call center support; and handling tax reporting beginning in 2006 for the 2005 tax year to providing HSA training and marketing tools he says CUNA Mutual tries to keep its HSA program user friendly. -firstname.lastname@example.org
Credit Unions Getting Serious about HSAs, CUNA Mutual Program Has 70 CU Participants
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