The bad news just won't let up. Before it runs its course, this economic recession will have touched nearly every business in every sector of our economy. Even as the credit union industry has been cited as a safe haven by media outlets such as Time and The Wall Street Journal, those headlines pale next to others that chronicle the latest corporate casualties.
When GM teeters between bailout and bankruptcy and Citigroup receives a huge capital infusion to save it from collapse, it's not hard to imagine how squeezed typical American businesses are feeling. They too are looking to cut expenses, either because their business is being impacted today, or they're preparing for their own downturn.
After wages, the most expensive cost center for many companies is employee benefits. And like it or not, benefits are a logical place to start cutting-especially as health care costs have spiraled out of control.
Since 2000, health care premiums have doubled, outpacing both wage increases and inflation. At the same time, the number of small employers offering coverage (those with three to 199 employees) has fallen from 68% to 62%. Such changes are forcing employers to choose between cutting wages, cutting benefits, shifting costs, reducing their workforces or hiring fewer workers. Like the domino effect, these steps lead to lost profits, lost wages and a major uptick in medical-related housing foreclosures and personal bankruptcies.
This dire economic environment is a clarion call to the entire credit union industry. Every credit union with a business-to-business development program can be out there talking to their SEGs and business members to see how they're faring. Many are doing just that, but more can join their ranks. They won't have in hand a silver bullet but rather an offer to sit down, listen and assess how to help.
One timely solution for the credit union business-to-business specialist to present to employers is a health savings account program for their employees-with the credit union as the custodian. This could help the business trim costs to stay competitive, while retaining employees and their benefits.
HSAs, first signed into law at the end of 2003, are the only federal savings mechanism to offer triple tax savings: tax-free deposits, tax-free withdrawals for qualified medical expenses and tax-free gains on the account.
Frequently called a medical IRA with a twist, an HSA must be accompanied by a high-deductible health plan, administered by the employer or the employer's broker dealer.
As of January 2008, America's Health Insurance Plans, or AHIP, a leading insurance trade association, reported that there were over 6.1 million HSA-eligible health plans, spread across a wide age and income demographic. That number is expected to continue to grow at a rapid pace.
On the financial end of the equation, HSAs are gaining momentum as well-particularly in the credit union market. According to October 2008 NCUA data, the number of credit unions offering HSAs between June 2007 and June 2008 grew by 53%. Over the course of that same year, the number of HSA assets held by these credit unions grew almost 160% (albeit from a small initial base). Stated differently, from June 2007 to June 2008, 47.5 credit unions per quarter added HSAs to their product portfolios. Increasingly, credit unions see the market potential of HSAs and the special role the industry can play in this young market.
Credit unions can set up an HSA program to solidify their relationship with their SEGs or business members in a new area: human resources via health benefits. Opportunities to deepen the relationship and increase their relevance from there, through cross selling and a greater presence at the employer are plentiful.
The SEG or business member might find HSA-eligible plans appealing as an employer because of their lower premiums and payroll tax savings. These plans also tend to cost less to administer. Once the employer is sold on the attractiveness of the consumer-directed, HSA-eligible health plan model, it is then the credit union's turn to inject itself into the benefits selection process, so that the credit union becomes the HSA custodian of choice alongside the health plan provider.
HSA plans won't be best for every employee. For many, though, it's a way to save tax-free for medical expenses now, while paying lower premiums, getting predeductible preventive care and perhaps building an additional tax-free retirement account-especially if the employer contributes to the account, a key to employee adoption.
Today, credit union business development teams can approach SEGs and business members from a position of strength, not so much to offer the solution to the economic crisis or its fallout but to reassure employers that for nearly 100 years, credit unions not only have been about their core business-taking deposits and making loans-but that they will be there as relevant partners and innovative problem-solvers for the next 100 years. And, as always, they will be putting people before profits. The need to help control health care costs is clear and solutions are available. Will credit unions answer the call?

Peter Barnard is president/CEO of Members Health Network LLC, a wholly owned subsidiary of Members United Corporate FCU. He can be reached at 518-292-3819 or at [email protected]