Two CUs, Treasury Outline Reasons To Offer Members Health Savings Accounts
Credit unions should make the most of these new or improved opportunities to serve members, especially Health Savings Accounts, according to experts and two credit unions that have started offering HSAs.
These three opportunities were showcased at NCUA Chairman JoAnn Johnson's Access Across America workshop held in conjunction with CUNA's GAC.
Health Service Accounts are an alternative to traditional health insurance that offer a different way for consumers to pay for their health care, Johnson explained, noting that HSAs enable consumers to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis.
W. Thomas Reeder, associate benefits tax counsel at the Treasury Department's Office of Tax Policy, called HSAs a "perfect trifecta" for CUs, their employees and their members.
For credit unions that are nervous about getting into a new program, Reeder said there's little need for concern, since CUs are already experts at offering a similar program: IRAs.
"It's exactly the same as offering IRAs. There are just the two forms to fill out, and you take their money and you're done," he said. "But of course, the thing is credit unions don't just want to take their customers' money. You actually want to educate them and make sure they're really doing it right. You actually want to help your customers. And I think that is cool."
The reporting for HSAs is also the same, and if a member asks for a disbursement, the CU doesn't have to ask why or what the money will be used for, he added.
One of the reasons Reeder and Johnson want to get the word out about HSAs is that currently there are only two credit unions offering the product.
"The one complaint [from consumers] we hear is that they don't know where they can put their money," he noted.
Maury Pilver, CEO of HealthAmerica CU, Jacksonville, Fla., agreed. As one of the only CUs currently offering HSAs, Pilver explained why his credit union was eager to jump on the HSA bandwagon.
"Small employers are really looking closely at this program," Pilver commented. "They see this as an answer to the problem of being squeezed by the HMOs."
And it's not just small businesses that are interested. "Most of the major employers are looking at HSAs as an alternative to traditional health care plans," he asserted.
As a credit union that serves the health care community, HACU closely monitored the precursor to HSAs-Medical Savings Accounts-but found those were very highly restricted with no ability to roll money over from year to year.
"HSAs are very different. We watched the enabling legislation and regulation very carefully," Pilver related. "Each of you can offer this at your credit union union."
Pilver noted that there isn't much DP support from vendors for HSAs at this time, but Johnson and Reeder pointed out that is because the forms and reporting requirements are so similar to IRAs, and that there is help to be had from both Treasury and the NCUA.
HACU has been offering HSAs for a few months and has opened about 100 accounts. "We're not turning the world upside down, but we think it's steady," Pilver offered.
1st Choice CU, Lincoln, Neb., hasn't begun offering HSAs to its members, yet, but it is offering it as an alternative to traditional health insurance to its employees, according to CEO Dale Springer.
"We've saved about a third on our health benefits by doing this, and it's a much better deal for the employee," he noted.
Reeder said another benefit is that if there are funds left upon the consumer's death, the HSA can be willed to an heir.
Among the other opportunities CUs heard about at the Access Across America workshop:
* New Markets Tax Credit, which permits investors to receive a tax credit for making qualified equity investments in designated Community Development Entities.
* Small Business Administration guaranteed loan program, which CUs can use to make member business loans they otherwise wouldn't be able to underwrite.
For more information on HSAs: