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HSAs: A New Opportunity for Banks

Federal legislation passed earlier this year created a new kind of health account that some banks are offering to their business customers. The Health Savings Accounts plans work like employer-provided flexible spending accounts in that account holders put aside money to be used to cover medical expenses.

HSA funds can be used to cover a wide range of medical, eye care and dental expenses. Unlike a flexible spending account, the money is not lost at the end of year, but can be rolled over from year to year and moved with an employee who changes his or her job. The money that goes into the account is tax free and because the balances can accumulate from year to year, the accounts provide employees a way to earn significant amounts of interest tax free. Unused balances can also be used for retirement benefits or long-term care costs.

The new account plans must be used in conjunction with a high-deductible health plan, which the law defines as a plan that has a deductible of at least $1,000 for an individual and $2,500 for a family. Charges from the doctor's office are submitted to insurance carriers just like normal insurance plans, and the insurance company pays bills from the participating HSA until the deductible is met.

We found one bank, Associated Bank, which is working with its insurance and human resources consulting affiliate, Associated Financial Group, to offer its version, which it calls Engage Health Savings Account Solution, to employers.

Associated Bank's program also allows participants to use a Visa debit card, automated teller machine or checks to access their funds for medical expenses.

Copyright © 2004 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 6, 10/10

First published on 10/10/2004

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