As many healthcare companies consider account custodial partners for their HSA offerings, it is important to keep in mind what their clients want and need.
In our recent study of 5,000+ HSA users, several important considerations surfaced.
The high degree of trust earned by “the blues” was evident in the study as was the fact that many individuals were unhappy with their initial choices for account custodians.
Therefore, it is important for insurance providers to “team” with account custodians offering products that meet the expanding needs of HSA users.
Many early account custodian providers offered products with high cost, low customer service and significant paperwork.
Many also suffered from the assumption that with a “brand” users would automatically flock to these custodians.
In addition, some insurance providers included the signup papers within the insurance program, giving users a start when they discovered they already had a custodial account.
Keeping the two parts of an HSA program separate is important as users become knowledgeable about these offerings. It is usually the account custodians, our survey showed, that were the object of any disappointment on the part of an HSA user.
In comparing the outlook of HSA policy owners with those that chose not to participate, there are also clear distinctions as to preferences and goals.
What was abundantly clear from our survey is the fact that most HSA users view the custodial account as a savings program rather than a payment platform. Therefore, they had certain requirements they absolutely required of a custodial account.
Among them are:
- Ease-of-use and the desire by many for an integrated approach to HSA account usage and management.
- Flexibility in choosing the account custodian with a strong desire for a savings component that builds towards retirement.
- An investment option above a certain “rainy-day” component.
- A feeling of being able to choose rather than being dictated to by the plan provider.
- Better educational tools to enable users to be informed users.
- A strong preference for checks over debit/credit card options
On average, users took up to 70-days to choose a custodian and 10% said they never would. This finding follows others showing that HSA purchasers view the process as a two-part endeavor.
While insurance providers believe offering one or two account custodians is a benefit to their policyholders, it opens the provider to angry recriminations should this recommendation not prove successful.
In analyzing the search characteristics of individuals visiting www.hsafinder.com for an account custodian, three factors leap out:
- Low or no set-up fees are desirable.
- Per transaction fees are preferred to monthly charges.
- There is a definite acceptable yearly charge range for accounts.
There is also a changing perception of the account custodian over time and the key to long-term success is customer service.
Insurance providers need to take into account many factors besides “brand” in deciding on an account custodian partner.
There is also the technical side of this equation, which also reveals a whole host of other questions.
Choosing a partner is growing more complicated as well, as new entrants come into the marketplace.
Today’s solution may not fit tomorrow’s needs.
Many insurance providers are facing a “build or buy” scenario when it comes to a custodial program. In many cases, they are seeking a way to participate in the savings portion of HSAs to offset lost premium revenue.
This need, which is being heavily investigated at the moment, requires a complex set of analysis that should include:
- Long term insurance provider objectives
- Upfront capital costs and ongoing expenditures
- Current and future IT capabilities
- Customer satisfaction
- Advantages of partnering and costs of doing so seamlessly
- Expansion possibilities (should other products be sold as well)
- Regulatory requirements and mandates
- Future growth of HSA, HRA, and other CDHC products
These are important to the future of insurance providers and require significant study and analysis. Insurance providers have time to do it right now; they can ill afford to make wrong choices and not maximize their participation in this booming market.
