espite American Express Co.’s decision to stop offering its health care-related
debit cards at the end of the year, other major issuers will continue offering the
credit cards to pay health care bills using employees’ health savings accounts and
health reimbursement arrangements.
American Express recently decided to pull its debit card because
of slow consumer adoption of company-sponsored HSAs, a spokeswoman says.
"Acceptance was moving more slowly than we anticipated," she
says.
Cigna Corp. and Empire Blue Cross Blue Shield, both of which
used American Express debit cards, are looking for new providers, spokesmen for
the companies say.
Steve Raetzman, Eastern division leader of group and health
care consulting with Watson Wyatt Worldwide in Arlington, Virginia, says the lack
of consumer education has much to do with the slow uptake of HSAs.
"This is going to take some education for sure," Raetzman
says. "That’s the responsibility of the employer."
It is estimated that 6 million U.S. residents are currently
enrolled in HSAs, a number the Treasury Department estimates will reach 14 million
by 2010.
Health benefit experts also expect the use of HSAs to grow
exponentially over the next three years, which eventually would mean profits for
companies providing debit cards as a means for employees to tap their HSAs and HRAs.
"I see this as continuing to grow," says Nancy Atkinson, a
Pittsburgh-based senior analyst with Aite Group, a financial-institution research
and consulting firm. "Health care remains a paper-intensive process that needs to
be brought to the 20th century, and cards are the way to make that happen."
To date, most major credit card companies—Visa, MasterCard
and American Express—offer health care credit cards.
Lissa Thomson, a San Diego-based senior vice president with
the benefits practice at Lockton Cos., says the outlook is good despite American
Express’ decision.
"There is not a shortage of financial institutions that want
to play a part in this business," Thomson says.
HSAs, created by federal law in 2003, allow consumers to save
money in a tax-deferred employer-sponsored account to pay future health care costs.
The accounts, often dubbed "medical IRAs," go hand in hand with high-deductible
consumer-driven health plans, which are being offered more often by employers seeking
to lower their health care bills and place more financial responsibility on workers.
HSAs differ from flexible spending accounts, which require
spending dollars put into the FSA within the same tax year or the funds will be
lost. HSAs roll over each year and can be used for future health costs.
HSAs and FSAs both involve filling out forms and awaiting
reimbursement—paperwork and time that was eliminated when debit cards arrived as
a means for employees to more conveniently access funds in the accounts. "This streamlined
the process," Aite’s Atkinson says.
Raetzman says many employees still confuse HSAs and FSAs and
are reluctant to sign up for fear that they would lose their contributions at the
end of the year.
Thomson says that as HSAs catch on, so will more tools—such
as debit cards—to utilize them.
That’s why most of the other credit card companies aren’t
about to follow American Express, according to spokespeople for the other major
credit card companies.
"I think of this as a blip, limited to American Express,"
Raetzman says.
In fact, health care debit cards will become more convenient
and user-friendly, according to industry experts, and HSAs are slowly catching on.
Bill Sharon, a Tampa, Florida-based senior vice president
with Aon Consulting’s health and benefits practice, says more than 400 financial
institutions now offer HSAs, a figure that has doubled over the past year. Also,
there are currently more than 9 million people enrolled in high-deductible CDHPs,
meaning they are likely to sign up for HSAs to use pretax dollars to cover out-of-pocket
health costs and deductibles.
In turn, credit card companies are looking at ways to increase
usage by offering points and rewards for using their card, Sharon says.
In the future, Thomson says she expects credit card companies
to link HSAs to personal checking accounts in case an employee exhausts funds in
their HSA.
Credit card companies are also beginning to offer lines of
credit attached to the HSAs, allowing employees to borrow in case of medical emergencies,
Thomson says.
"There’s opportunity here for financial institutions," she
says.
Workforce Management Online, September 2007 --
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