FRAMINGHAM, Mass. — There seems to be no slowing down when it comes to health savings accounts.
A recent report by independent research and advisory firm Financial Insights entitled HSAs Cards: Their Past, Present and Future, says that 2007 is expected to be an "introduction year" for health care system innovation.
In addition, the report finds there is a "tremendous opportunity" for financial institutions to capitalize on the rapidly changing environment.
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"They need to train or hire the expertise to work with insurance companies and their small businesses to establish plans for the employees," said Dana Gould, senior research payments analyst and author of the report. "Financial institutions will benefit from the dollars placed into these accounts, the organic growth these plans provide and the opportunities to cross-sell to these employees."
Gould adds that as the cost of health care increasingly shifts to consumers through increased use of co-payments and an increase of consumer-directed health care, providers and payers are looking for a solution that provides real-time administrative health care information, complete payment assurance and effective payment processing capabilities.
"The first-to-market financial institutions partnering with successful vendors offering viable solutions stand to gain deposits, customer relationships, and even service fees that could be established for the services to be provided," said Gould. "HSA deposits and accounts are showing tremendous growth and are providing financial institutions a new source of funding over the next few years."
With forecast growth in spending on benefit cards, including government benefits, at 18.9% a year from 2003 to 2008, health benefit cards remains one of the best opportunities for financial institutions in the prepaid card market.
There are currently some three million accounts open with about 25%-30% of them attached to debit card accounts, growing at an annual rate of about 17.7%. According to Gould, with the changes made to HSA programs, that figure is expected to increase over the next few years.
"Financial institutions should begin to benefit from providing these services now, and they can begin to accumulate the deposits that should stick with them in the future," said Gould. "These HSAs plans provide the perfect opportunity for cross-selling into the wealth management systems as the funds accumulate and become available for retirements of the holders."
As for vendors, Gould says they could be at the forefront of this movement by developing systems that make HSAs easy to understand and use by the accountholders and all participants in the plans.
"The financial institutions, the payers and the providers must be assured they are able to respond to inquiries and are able to provide the necessary information to their accountholders," said Gould. "The vendors that are first to market with viable solutions stand to gain the relationships with the financial institutions, the insurance carriers and the various health providers."
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