Wells Fargo & Co., selected recently to be the trustee of Health Savings Accounts offered by Blue Shield of California, sees great opportunity in the product, an executive said, particularly for its debit card and investment management businesses.
John Reynolds, a senior vice president at Wells Fargo Institutional Trust Services, said, "We're viewing this as a major opportunity for the company because it brings together some of our core competencies both in the investment management as well as the card services space."
Blue Shield of California, based in San Francisco, said Wednesday that it had chosen Wells Fargo Institutional Trust Services to administer HSAs for eligible plan members.
HSAs were created by the Medicare Prescription Drug and Modernization Act in December 2003. They are tax-advantaged personal savings or investment accounts that are owned and controlled by members of high-deductible health plans, and they are used to pay, tax-free, for qualified health expenses.
Mr. Reynolds said that Wells Fargo's broad capabilities in investments and data handling are a plus for administering these kinds of accounts. The company is looking to develop further synergies with its cards business, he said.
Many HSAs offer debit cards on the account that can be used to pay health-care expenses, he said, but Wells wants to go further. For example, "the same card could also carry their flexible spending account and dependent care account," he said.
The company also is examining ways to encode cards with data about the specifics of a health plan, he said. Reading the card could then tell health providers how much, for example, the plan pays for specific services and therefore how much to charge. This would bypass time-consuming billing and paperwork, he said.
The technology to realize many of these ideas already exists, Mr. Reynolds said, so the big issue is implementation.
Wells Fargo is the trustee for 28 health insurance carriers, with a little more than 50 million policyholders.
Patrice Smith, the director of corporate communications at Blue Shield of California, said the insurer has been offering high-deductible health plans since early this year but that the relationship with Wells is its first with an outside financial trustee for these plans.
"We have several high-deductible health plans that we offer, and if someone was a member and they had a high-deductible plan and they were interested in establishing an HSA, we would tell them to work with their tax adviser or go to a financial institution that would help them," she said.
The alliance with Wells lets Blue Shield of California direct interested customers to the Wells Fargo Bank unit to create an account that would work seamlessly with the Blue Shield health plan.
In addition to working with Wells, Blue Shield plans to introduce four high-deductible health plans compatible with HSAs on Jan. 1. These offerings would extend the company's already available qualifying plans, it said.
Ms. Smith said that Blue Shield of California does not break out the participation in its individual plans, but she did say that the company's $2,400 deductible plan, which is HSA-compatible, has become one of its best-selling products.
Blue Shield of California has 3.2 million members and is the third-largest health plan in California. It is part of the Blue Cross/Blue Shield Association.
"We believe that this is going to be a big business over time," Mr. Reynolds said, highlighting the high adoption rates in the industry in just the short time the plans have been available. He predicted that interest in the plans from insurers, employers, and consumers would "accelerate" in 2005 and 2006.
Recent data from Milliman Global supports that assertion. In a survey of health insurers released last week, the Seattle consulting company found that 89% expected to offer health savings accounts or health reimbursement accounts with a high-deductible plan to employers next year, up from 29% in last year's survey.
The health insurers reported they expect 7.8% of 2005 commercial group premium revenue to be attributable to these products, compared with 3.2% in 2004.
