In most cases, a credit union's members would rather turn to the credit union they know and trust for all of their financial needs instead of establishing a new relationship with another financial organization. It only stands to reason, therefore, that members who are small- business owners would look to their credit unions when it comes time to invest in a Health Savings Account (HSA) or begin an HSA program for their employees.
The recent Community Bank Competitiveness Survey from the American Bankers Association (ABA) and the ABA Banking Journal shows employer and professional groups account for nearly 70% percent of the productive HSA marketplace among community banks. And more than 48% percent of community banks offering HSAs say they help with customer retention efforts. Although these figures relate to community banks and their customers, this data suggests a good reason for credit unions to start paying more attention to the value HSAs can bring in better serving and retaining their business services members.
I use the words "can bring" because while HSAs, in conjunction with High Deductible Health Plans (HDHPs), are growing in popularity with larger employers, many small business owners haven't fully embraced them yet. In fact, a number of small employers have begun to drop health insurance coverage altogether due to skyrocketing costs according to the 2007 National Survey on Employer Sponsored Health Plans. The survey shows just 61% percent of small businesses, those with 10 to 200 employees, offering some sort of health insurance plan compared to 69% percent in 2001. The same study shows only 11% percent of small businesses offer ann HDHP, which is typically much more cost-effective for an employer than a traditional health insurance plan.
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So why haven't more small businesses considered offering their employees a combination HDHP-HSA? The answer is often a lack of awareness or education surrounding both. A 2007 survey by DSS Research for the National Federation of Independent Businesses shows only 11% percent of respondents as saying they had a "thorough" understanding of such plans, while 32% percent claimed a "good, basic" understanding.
It's obvious, then, that a credit union needs to educate its business services members on the benefits of HSAs before selling them. But first, a credit union must educate its own staff. A unique way to do so is for a credit union to investigate offering its own HDHP-HSA program to employees. This is a first-hand way for employees to learn more about HSAs and how to articulate the benefits to members. Traditional learning methods should be used to supplement employees' knowledge as well, such as in-person seminars, webinarsWebinars, and reading materials.
Once a credit union and its employees understand how HSAs work and the value they bring to business services members, the next step is to consider what mix of HSA products and services is right for their field of membership. In its 2007 report, HSAs: Beyond the Growing Pains, Celent predicts the number of HSAs will jump from 1.9 million in 2007 to 12.5 million by 2012. The analyst firm goes on to prognosticate that the next two years will be a period of churn in the HSA marketplace, during which financial institutions that offer the best customer service and services such as online account management tools such as online account management tools, will win.
Education surrounding HSAs will be a key service provided to business services clients and their employees. You may have noticed that in-person meetings are a much more effective way to sell members on other investment products. Annual reviews with commercial members are a great way to convince them of the cost-savings HSAs can bring. And oOn-site seminars are one of the most effective ways to help employers convince their employees of the benefits they'll derive. It will also be important to utilize other useful educational tactics as wWebinars, print materials, statement stuffers, newspaper advertisements, and signage within the credit union.
An important part of an HSA service offering will also include an online technology system to open, administer and manage accounts that is user-friendly to credit unions, employers and employees. Such a system allows credit unions to automate HSA-related business processes like eligibility, enrollment, account management, claims submission, expense substantiation, receipt storage, reporting, analysis, member service and Internal Revenue ServiceIRS regulatory form filing.
By executing these processes online, credit unions can help employers and their employees as well as individual consumers open accounts more quickly and reduce the number of errors associated with manual enrollment. And through online account management, a credit union's members can gain easy access to their funds, view all of their account activities and learn more about HSAs and the investment options available to them.
Finally, a credit union needs to consider what other HSA-related products its business members and their employees will need, such as debit cards and checks that help make paying for medical expenses easier on an every day basis.
HSAs represent not only a significant opportunity for credit unions to better serve business members and grow revenue, but for a credit union's business members to continue helping their own employees pay for healthcare and manage their bottom line. The key to making an HSA offering successful and employers and employees making their program work for them, lies within continued education, communication and the right mix of products ands services.
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