Apr 12, 2018
Over the past 15 years since they were created, health savings accounts have grown to 22 million accounts totaling $45.2 billion in assets — and assets are expected to surpass $60 billion by 2019. This fast-growing market represents a strong business opportunity for banks, according to two experts speaking on the latest episode of the ABA Banking Journal Podcast that is sponsored by WEX Health.
The growth of HSAs, which are paired with high-deductible health plans to incentivize plan participants to manage health spending wisely, has become a path to controlling the skyrocketing growth of health-care costs, says Roy Ramthun, an HSA consultant who led the implementation of them 15 years ago at the Treasury Department. “Employers are saving on average 13 percent on their premiums,” he says. “Many of them are reinvesting these savings in the form of a contribution to their employees’ HSAs.”
Banks have several opportunities in the HSA market, says Jim Gandolfo, the chairman of ABA’s HSA Council and SVP in PNC’s treasury management group. Some may see it as a deposit play. “In general terms, these are very favorable deposits looked upon as very sticky to the bank,” he says. “If you’re a Basel III bank… these are very attractive to you.” The HSA market also offers interchange opportunities — through the debit cards plan participants use to make qualified medical expenses — and account-level fees as well, he says.
HSAs are also a powerful way to deepen relationships with commercial customers, Gandolfo says, since they provide an additional touch point in the commercial business and give employers with a tool to constrain their health-care costs. Banks structure their HSA businesses in a variety of ways: some run it out of the wealth management or retirement area; others build a health-care vertical as part of a commercial lending group; and still others manage it out of the investment side of the house, Gandolfo adds. “Community banks are the perfect place for the offering of an HSA because they have those relationships with the employers in their communities,” he says.