Bank of New York Mellon Corp.'s health savings account business ballooned in size over the past 12 months as its partnerships with health insurers bore fruit, the company said.
"We are growing rather dramatically," said Darren Baer, first vice president and senior technical marketing representative with BNY Mellon Working Capital Solutions.
The company's 300,000 health savings accounts have assets of $200 million, Mr. Baer said. At this time last year, what was then Mellon Financial Corp. had 105,000 HSAs with assets of $75 million, he said.
The Pittsburgh company's July 1 merger with Bank of New York Co. Inc. did not affect the totals because the New York company did not offer HSAs, Mr. Baer said.
Bank of New York Mellon focuses on signing up employers and workers through partnerships with insurers such as Independent Health of Buffalo, Harvard Pilgrim Health Care of Wellesley, Mass., and WellPoint Inc. of Indianapolis.
It is opening 10,000 accounts a month, Mr. Baer said. Its typical customers are employees of small businesses that the company has targeted through its alliances with health plans.
The company emphasizes employer and employee education in the HSA businesses. It gets a big assist there from Affiliated Computer Services Inc. of Dallas. Affiliated, a business process outsourcing and information technology provider, bought Mellon's human resources consulting and outsourcing businesses in 2005.
Despite its rapid growth, Bank of New York Mellon is not among the five largest HSA custodians, according to Information Strategies Inc..
The Palisades Park, N.J., research firm said the top five by number of accounts containing positive balances are the HSA Bank subsidiary of Webster Financial Corp. of Waterbury, Conn.; Exante Bank, part of UnitedHealth Group Inc. of Minneapolis; JPMorgan Chase & Co.; Wells Fargo & Co.; and Msaver Resources LLC, the HSA unit of the Memphis banking company First Horizon National Corp.
Information Strategies said that because of confidentiality agreements with the banks, it would not disclose the raw numbers.
Though Bank of New York did not bring HSA accounts to the merger with Mellon, its Pershing LLC unit could dovetail well with the product, Mr. Baer said.
The bank's HSA team is in early discussions with Pershing about making its investment platform available to health savings account holders, he said. HSA customers can roll over unused funds at the end of each year, and those with growing unused balances are expected to invest the money increasingly, industry experts have said.
Pershing already has its tentacles in the HSA business. In June it announced it had started offering its broker-dealer customers access to health savings accounts through HSA Bank or Millennium Trust Co. LLC of Oak Brook, Ill. Under the arrangement, Pershing will be the custodian for investment assets connected to the accounts.
Views about the HSA industry's momentum differ. Information Strategies predicts that the total number of accounts will more than double this year, to 8 million.
Some of that growth is likely to come through conversions of medical savings accounts, a precursor to HSAs, said JoAnn Laing, Information Strategies' president and chief executive.
"We're estimating that 30% of MSA account holders have still not switched over," she said.
But the firm found that growth in the number of accounts fell 16% in the second quarter compared with the first quarter. A survey it did in July of 5,000 HSA customers, however, found that 83% would recommend the products to friends and family.
Then there is the warning from a study released in May by the consulting firm Towers Perrin that current enrollees in consumer-driven health-care programs, including HSAs, are far less satisfied with parts of those plans than are enrollees in traditional health benefit plans.
