BASKING RIDGE, N.J. -
Assuming that members would be looking for a place to park their accounts, the credit union opted to launch a Health Savings Account (HSA) program, said Affinity VP-Member Experience Donna Lostocco.
Though HSAs were created four years ago as part of a Medicare bill signed into law in 2003, financial institutions have been somewhat slow to jump on board, and those that have largely report only moderate success with the product.
The goal of an HSA is to help individuals save for future qualified medical and retiree health expenses on a tax-free basis-in a sense, an Individual Retirement Account (IRA) for medical costs associated with high-deductible health plans. It sounded like just what the doctor ordered for those Affinity members employed by AT&T who were being switched to a high-deductible health plan.
"Primarily it's a deposit strategy," Lostocco said, noting that most of the work starting an in-house HSA program was researching the legal and compliance issues regarding a still relatively new product for consumers. The HSA program was first researched at the end of December 2006 and launched in February of this year.
Affinity FCU's quick jump start of its HSA program started with research and following the lead of more experienced credit unions - in particular Patelco FCU, whose website has a "Q&A" section that proved most helpful.
For credit unions considering starting an HSA program, Lostocco cited the U.S. Treasury Department's website as a valuable tool with plenty of information on the basics of HSAs. Affinity paid $7,500 for a new platform within in its existing XP Systems core processor to handle the accounts and bought online forms from Bisys for another $2,000.
The credit union set the HSA program up with "no fees." And when Affinity FCU says "no fees," it means it:
* No account opening fee.
* No monthly maintenance fee.
* No annual fee.
* No minimum balance.
* No account closing fee.
* No debit card usage or check writing fees.
Lostocco said 12 accounts are open with another 100 being processed, with some members switching existing accounts to Affinity after learning of the no-fee, 5.13% rate HSA.
"It doesn't sound like much, but there's a lot of paperwork," she said.
Lostocco said Affinity Federal quickly trained its employees to sell HSAs and said a key action was when to refer members to the credit union's in-house investment representatives. Members have dozens of questions regarding the tax status of HSA accounts and their deposits and Lostocco said it's important to get professional advice from a trained and certified representative.
Any credit union interested in launching its own HSA program can hit the ground running with free advice from the Treasury and Patelco, Lostocco said.
FOR INFO ON HSAs
* Credit Union Journal subscribers can read more about how other credit unoins are implementing HSA programs by visiting www.cujournal.com and searching "Health Savings Accounts" in the left navigation bar. To contact some of the other resources in this story:
* XP Systems at www.xpsystems.com.
* Treasury Dept. at http://treas.gov/offices/public-affairs/hsa/
* Patelco CU at www.patelco.org.
* Bisys at www.bisys.com.
* Affinity at www.affinityfcu.org.
