[IMGCAP(1)]
Prepaid debit cards are surfacing in different sectors, from unemployment benefits to payroll. Moreover, debit cards tied to tax-deferred health savings accounts in the U.S. likely will hit record numbers again this year as more consumers opt for less-expensive alternatives to skyrocketing health-insurance costs.
The top five HSA debit card issuers combined had 1.98 million accounts as of the end of March, according to survey results that that will appear in the 2010 edition of the ATM&Debit News EFT Data Book, which will publish as the newsletter's Sept. 24 issue.
Individuals deposit funds into their HSAs and use the debit card to pay for what the IRS says are qualified medical expenses.
ACS/The Bank of New York Mellon leads with 650,000 accounts, followed by Optum Health Financial with 480,000, JPMorgan Chase & Co. with 400,000, HSA Bank with 250,000 and Wells Fargo & Co. with 200,000.
In terms of HSA assets, Optum Health Financial has $810 million in assets as of end of March, according to the data book . HSA Bank follows Optum Health with $680 million in assets, Chase with $550 million, ACS/Mellon with $438 million and Wells Fargo with $324 million.
Financial firms held close to $4.2 billion in HSA assets as of the end of the first quarter this year, up 32% from $3.2 billion a year earlier, according to the results of an annual survey Washington, D.C.-based Atlantic Information Services Inc.'s monthly newsletter Inside Consumer-Directed Care released in March.
Some 8 million Americans this year are covered under high-deductible health insurance plans tied to HSAs, analysts estimate. Market research company Celent Inc. projects that if present trends continue, by 2012 approximately 12.5 million U.S. consumers will be covered by HSA high-deduc-tible insurance plans.
But the future of HSAs is uncertain because of talk in Congress about major health care reform.
"HSA banks are proceeding with business as usual, but many are taking a cautious approach to future planning until they know exactly how health care reform may affect them," says Red Gillen, a senior analyst with Celent, a U.S.-based consultancy.
None of the major health care-reform proposals directly threatens HSAs, he adds.
Some companies have abandoned the market, while others are thinking about a change.
American Express Co. exited the HSA market last year, citing high costs and low interest from consumers. And Blue Healthcare Bank, which the nation's Blue Cross and Blue Shield health-insurance plans introduced in 2007, is up for sale, reportedly because of the market's uncertain future. Some 33 Blue-branded insurance companies own a stake in the bank, which serves 14 Blue-branded plans across the U.S. through 6,300 HSAs.
But many issuers that made a significant commitment to HSAs have declared them to be successful. Indeed, HSAs have been among the fastest-growing retail-banking products in the U.S. over the past two years, analysts say. ATM
