In Wisconsin, 30 credit unions are now offering health savings account (HSA) programs, according to the Madison-based Credit Union National Association (CUNA) Mutual Group.
Nationwide, about 20 percent, or 400 out of 8,700 credit unions offer HSA programs, an increase from 2005 when 160 credit unions offered the program.
HSAs are tax-deductible accounts that individuals and families can deposit money into to save for future medical expenses. The HSA is designed to create a tax-free way for employees to save money for health care expenses, including higher deductibles that are becoming more common in health insurance plans as employers look for ways to lower their health benefits costs.
Although Wisconsin is one of only four states that does not offer a state tax deduction for HSA owner contributions, the high number of employers in the state that offer high-deductible insurance plans has influenced consumer demand and credit union adoption.
The Green Bay area in particular is one of the top areas in the nation for employers offering high-deductible insurance plans, according to CUNA Mutual Group.
“I think it is going to become a growing trend as HSAs become better known and start to be
promoted by insurance companies,” said Robin Marohn, vice president of marketing and business development for Heartland Credit Union in Madison.
Heartland Credit Union rolled its program out on May 1. Despite Wisconsin’s refusal to offer a state deduction, the federal tax deduction is still available to participants, which continues to drive incentive to enroll, Marohn said.
The idea to begin the HSA offering came from an unofficial partnership with the Farmer’s Health Cooperative of Wisconsin, which began offering coverage in April. The cooperative offers insurance plans for farmers and agriculture producers. Two of their six plans offer high deductibles that work well with HSAs and Heartland Credit Union happens to serve a large farming and agricultural population, Marohn said.
“We are going to give ag producers much more control over how they spend their health-related dollars,” Marohn said. “Farmers and ag producers always had a hard time getting good health insurance. Anything we could do to help that along, we thought, was a good thing.”
Heartland had been working on the HSA launch since the first of the year. It took about four months to make sure that all of the federal regulations and reporting requirements were adhered to, Marohn said.
For 2007, federal mandates require individual insurance deductibles to be at least $1,100, at least $2,220 for families and out-of-pocket limits not to exceed $5,500 for individuals and $11,000 for families. Individual contributions cannot exceed $2,850 per year and family contributions cannot exceed $5,650 per year.
To enroll, individuals must work or live in the community that Heartland serves. Because the HSA account is equivalent to a checking account, participants do not have to roll over other funds into Heartland Credit Union, Marohn said.
Before Heartland launched the program on May 1, about 40 members had already pre-registered for the program, Marohn said.
Landmark Credit Union, based in New Berlin, the largest credit union in Wisconsin, launched its HSA program on April 1 based on customer demand, said Sharon Mather, senior vice president of Landmark Credit Union.
“We had quite a few members ask about HSA accounts,” Mather said. “With insurance deductibles (as high) as they are, and all of the talk in the news about how people are having a hard time coping with (high deductibles), we thought HSAs would be a great product to help our membership.”
Since the April 1 launch, Landmark has enrolled about 17 participants. Many of Landmark’s members are self-employed or work for small businesses. Both groups have expressed interest in the HSA programs and make up the majority of those already participating.
Landmark Credit Union’s HSA program offers a savings rate of 4.51 percent and an annual percentage yield of 4.6 percent.
Although HSAs are still gaining traction in the marketplace, Landmark Credit Union feels it is serving its membership by offering the program, Mather said.
Both Mather and Marohn expect their HSA programs to be popular and long-term offerings.
“We did not expect to open 1,000 accounts in two weeks. We knew it would be a slow builder,” Mather said. “It is just about getting the word out and letting people know the account is there to help them.”
