If you offer health savings accounts, chances are baby boomers will be familiar with key basics before they approach the credit union.
At least, that’s the experience of Joseph Schaefer, vice president and program manager for CUSO Finance Services/Telhio Investment Services at the $477 million Telhio Credit Union in Columbus, Ohio, and Joy Knaub, senior product manager at the $2.1 billion Bellco Credit Union in Greenwood Village, Colo.
They have also discovered that as boomers start to experience at least the early impact of aging, they fret that increased medical costs could be looming.
Do they need to worry considering that national health insurance is coming?
“I think they’re puzzled and uncertain,” Schaefer said. “It hasn’t been explained very well. There are a lot of half-truths going around on both sides of the issue. It takes a fair amount of digging.”
Health savings accounts were first created to help Medicare recipients pay for their prescription drug coverage. According to the U.S. Department of the Treasury, any adult with a high-deductible health insurance plan is eligible to create an HSA and can make tax-deductible contributions to the savings plan throughout their plan year.
Schaefer said boomers’ concerns include the cost of medical care going up while insurance coverage has been ratcheted back. Meanwhile, some end up having to handle the expenses on their own.
“There seems to be a lot of confusion and doubt about Obamacare or whatever you want to call it. It’s a lightning rod issue for a lot of people,” Schaefer said.
The uncertainty has evidently prompted boomer members to do at least some research. By the time they approach Schaefer, he finds they are somewhat acquainted with the concept of a HSA. Their insurance provider may have told them they should look into opening one.
“They more or less stagger in and say they need to open an HSA. We then help them through the process,” Schaefer explained. “Once we tell them these are great products, and this is an account that will stay with them forever regardless of what happens with their insurance, then it makes sense to them.”
Each member’s needs are different. Schaefer said if an employer offers a Cadillac account, for instance, this is what a member is going to pay every month. The account holder could opt for a high-deductable plan and pay a fraction of that.
“If you are someone who, unfortunately tends to run up a lot of medical bills, you’re never going to be able to save up enough to pay the deductible if you do have a health care crisis,” Schaefer said. “But if you are relatively healthy, you can afford to roll the dice a little bit.”
At Telhio, there have been a couple different layers of marketing. In addition to information aimed directly at members, the credit union’s business development team has offered presentations at select employee groups’ workplaces to familiarize human resource departments with HSA options, Schaefer said. Often, even the HR people don’t know all the features of such accounts, he added. So far, Telhio has 650 HSAs.
Knaub said the demographics of the nearly 450 members who have opened HSAs at Bellco reveals boomers are well represented. By the time they ask about the product, the purchase decision has likely already been made. Usually that has been driven by the fact the member has a high-deductible health plan, which is needed in order to qualify for an HSA.
Bellco has seen increased interest in HSAs going back before the passage of the Patient Protection and Affordable Care Act, informally called Obamacare, Knaub said, adding, she attributes that growth in interest to rising health care costs.
“When we do our business case and look at the research, I know there are industry experts who say that at some point legislation, [Obamacare] may drive an increased interest,” Knaub said.
That time may come when employers are required to offer insurance to their employees and may very well use that type of high-deductible insurance product to meet the requirement, Knaub offered saying, if this occurs, there may be greater attention given to HSAs.
Knaub said Bellco put HSAs on its product menu in response to member asking if the credit union offered the accounts. Again, by then, those members had already made the insurance decision, she pointed out.
The current list of some 450 HSA accounts is pretty much on target with what Telhio expected, Schaefer said. A very high percentage of those accounts are funded, countering a concern people would opt for a high-deductible insurance policy and not fund their HSA, which could possibly put themselves at risk if they face a medical emergency.
Overall, Knaub said HSAs weren’t challenging since the credit union already offered IRAs and was familiar with tax requirements.