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WEST PALM BEACH, Fla. – While many are still contemplating whether to add Health Savings Accounts to their employee benefits options, opportunity is knocking when it comes to offering Health Savings Accounts (HSAs) to members. 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 for 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 High Deductible Health Plan (HDHP) self-coverage is $5,100 and $10,200 for family coverage. Currently only a total of three credit unions offer HSA accounts-Wichita, Kansas-based Mid-American CU, Jacksonville, Florida-based HealthAmerica CU, and Bartlett, Tennessee-based First South CU. “If a credit union can offer these accounts then they should just do it,” said First South Credit Union Marketing Director Delynn Daniels. “Especially since there aren’t that many financial institutions offering HSAs yet. We were the first in the market to offer them here and the member response has been great and we think this is only just the tip of the iceberg.” The $238 million credit union recently started offering HSAs when research revealed that many small and mid-sized businesses in the area were unable to afford to provide staffers health care and no other financial institutions in Barlett, Tennessee were offering the accounts. Daniels says First South has already opened some 20 accounts, and by laying the groundwork now is putting the credit union in a strong established position in the marketplace. A dedicated manager pulls weekly reports on the HSAs to check accounts and balances. According to Daniels, with the credit union’s long history in working with companies the transition has been an easy one in dealing with employers for HSAs. “We’re very fortunate that our CEO and board are such visionaries. This is now another way for us to better serve existing and potential members while developing long term relationships because this isn’t something that is only needed for one year so it is a great way to keep funds here,” said Daniels. “That being said I can’t stress how important it is to do the research of your membership to see if this is a right fit,” she said. Credit unions should also ensure its operating systems can handle HSAs. “For us it’s been a win-win.” HealthAmerica CU CEO Maury Pilver couldn’t agree more. His $78 million credit union was one of the first to offer HSAs. “We’d been studying the HSA forerunner, Medical Savings Accounts, for about 10 years because we serve multiple healthcare employers across 46 states. So when Congress passed the bill we knew we wanted to get on it right away and that is why we were the first or second in the country to offer the HSA program,” said Pilver. “The real potential is that we see this as an opportunity to not only distinguish credit unions-because only a handful of banks offer HSAs nationally – but also take a step in the right direction to help control healthcare and offer a service to those who need it most,” said Pilver He recalled a call the credit union received from a member whose husband had been laid off with no health insurance. Unfortunately he had melanoma. “We were able to put them in touch with an insurance agent who found them a policy without the typical pre-existing condition exclusions,” said Pilver. Partnering with a national health insurance company that provides HDHPs, HealthAmerica CU provides the depository and administrative services. So far the credit union has opened some 100 HSA accounts. Pilver, who recently touted HSAs’ benefits during CUNA’s Governmental Affairs Conference, has been invited to speak at future NCUA Access Across America workshops in California and New Jersey. Pilver says the accounts are handled like IRAs and it is important for credit unions to take the time to understand and familiarize themselves with the whole process. “It is getting easier. When we first started offering it there were no forms available-it was too new,” said Pilver. “Now there are many resources and forms available on the Treasury Web site and credit unions interested in opening accounts for employees or to offer to members can even do it with us.” HealthAmerica CU has gotten great response to its radio spots during such popular talk shows like Rush Limbaugh and Consumer Action Center’s Clark Howard. Plans are also underway to run a few spots on the Laura Ingraham show and Financial Guru Dave Ramsey’s show. First South has found success with direct mailings to local insurance companies. “We’ve let insurance companies here know that if they are looking for a local financial institution that can offer HSAs we’re it,” said Daniels. “We try to be flexible and offer everything from doing joint mailings with the insurance companies to their clients to us handling it all from letterhead to postage.” Daniels said the CU has garnered 10% response rate from these mailings and at least three to five insurance companies a week contact the CU about HSAs. “We’ve also been very fortunate to not only have lots of local press coverage but to have signed on a few doctor’s offices who told us they were tickled to be able to provide their employees health insurance.” Pilver adds that the time is right for credit unions to offer these accounts. “I think credit unions should recognize the predictions are that most major employers will be offering this in the next year or two at the very least as one of their benefits options, ” said Pilver. “ It is a good opportunity for credit unions to have this to offer members and SEGs rather than have them head to a bank.” [email protected]


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