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#1770930 - 12/28/12 01:03 PM HSA's: Are they profitable for your bank?
Elwood P. Dowd Offline
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Elwood P. Dowd
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When they rolled out the HSA as the replacement for the MSA we evaluated them as a bank product. We concluded they were a great deal for the taxpayer, but a truly lousy deal for the bank. We felt they would be the polar opposite of IRA's which produce large core deposits and generally have very little activity.

If you offer HSA's, what has your institution's experience been? Are they profitable?

Same Q & A from 7 years ago.

There are a lot of HSA questions asked here that indicate the banks offering them do not fully understand their product or the role of a custodian vs. that of a tax advisor. For them, IRS Publication 969 is a good introductory resource.
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#1778061 - 01/18/13 06:52 PM Re: HSA's: Are they profitable for your bank? Elwood P. Dowd
Elwood P. Dowd Offline
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Elwood P. Dowd
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Next to Harvey
Bump
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#1778200 - 01/18/13 09:31 PM Re: HSA's: Are they profitable for your bank? Elwood P. Dowd
John Burnett Offline
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Guessing maybe our non-responders with HSAs don't know if they're profitable or are embarrassed to say how much of a "dog" the product is. Anyone will to share with Ken?
Last edited by John Burnett; 01/18/13 09:32 PM.
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#1778216 - 01/18/13 09:48 PM Re: HSA's: Are they profitable for your bank? Elwood P. Dowd
Lilly C Offline
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Lilly C
Joined: Dec 2004
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Sunny Florida
We've had numerous H.S.A. that we've opened since we introduced the products a few years ago. We made it very attractive with only a $5.00 fee for paper statements if they opted for that. We also offered a very generous rate. Since then we have lowered the rate significantly and that has slowed down the number of H.S.A. we've opened. On the other hand the average balances kept in the accounts are so low... IMHO I don't think it was worth it at all to offer the product. It's more of a pain than anything. We've had a handful of customer have overdrafts and we've had to close out the accounts. When we returned the checks we've had some pretty upset customers the branches had to deal with. If it was up to me I would get rid of them.

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#1783528 - 02/06/13 11:37 PM Re: HSA's: Are they profitable for your bank? Elwood P. Dowd
el guapo Offline
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el guapo
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Much to the dismay of our front line staff who are occasionally led to believe that they will be swimming in overflowing pools of commission money if we offer them...every time we have explored the possibility of offering HSA products it is very clear that they do not fit in with our overall direction and would most certainly not be profitable.

The biggest challenge is trying to make people understand that stand alone HSA accounts are disappearing and will be virtually non-existant eventually. HSAs are being offered by employers in conjunction with cheaper High Deductible Health Plans for their employees as an employee benefit. The pool of people shopping for an HDHP and an HSA a la carte is small and not growing.

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#1883092 - 01/03/14 08:32 PM Re: HSA's: Are they profitable for your bank? Elwood P. Dowd
ahanna Offline
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Texas
To revive an old topic.... we recently acquired another institution who maintained a whopping 3 HSA accounts. We have never offered this product and need to decide how to proceed. I am guessing we need to figure out annual reporting (5498-SA and 1099-SA) for the time being and then decide whether or not to maintain these accounts going forward?

Is there anything else we need to do that I am missing? Thanks in advance for any help!
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#1883194 - 01/03/14 11:57 PM Re: HSA's: Are they profitable for your bank? Elwood P. Dowd
rlcarey Online
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rlcarey
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Galveston, TX
Well, you can't just get rid of them, you are going to have to find a new custodian to take them off of your hands. These are not normal deposit accounts that you can just close at your discretion.
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#1883378 - 01/06/14 05:49 PM Re: HSA's: Are they profitable for your bank? Elwood P. Dowd
el guapo Offline
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el guapo
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You definitely need to bring yourself up to date on HSA reporting and account maintenance practices. Hopefully the institution you acquired had someone on staff that was responsible for this and is still around to assist?

As for deciding what to do going forward, you should start by looking at the HSA agreement on file and see if there is any disclosure with regards to resignation as the HSA custodian. If there is a clause in the agreement that does allow for resignation as custodian it opens up your options with regards to what to do with these 3 accounts. The most cut and dry method, but a bit rough for the client, would be to provide whatever agreed upon notice of resignation is required by the agreement and allowing the HSA clients to find a new custodian to accept their accounts by transfer or rollover. You could also do as rlcarey suggested and actually find a new custodian for them, although that will most likely also require notice with the option for them to find an HSA custodian of their choosing before the accounts are transferred to the new custodian.

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#1884901 - 01/09/14 10:19 PM Re: HSA's: Are they profitable for your bank? Elwood P. Dowd
ahanna Offline
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Texas
Thanks so much for your replies! Unfortunately we have no one on staff that is familiar with them (even staff from the prior bank) so all advice is much appreciated.
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