Begonya Klumb has been closely tracking a health reform debate in Washington that could mean millions for her Kansas City-based company.
The bill pushed by Republican leaders in the U.S. House of Representatives includes a significant expansion of health savings accounts (HSA) and Klumb is the CEO of UMB Healthcare Services, a major player in the national HSA market.
“We are watching the legislative process and we think so far the number of provisions that impact HSAs are positive,” Klumb said. “We are supportive of those provisions.”
U.S. House Speaker Paul Ryan and conservative groups have touted those parts of the American Health Care Act, which would almost double the current annual contribution limits of $3,400 for an individual and $6,750 for families.
While other parts of the bill have divided the GOP caucus, HSA expansion is almost universally popular with Republicans. Klumb said even if the current Obamacare replacement fails, there’s other bills in play that favor the industry.
With about 100 employees, the HSA unit is a small slice of UMB Financial Services’ total of almost 3,900 workers, about half of whom are based in the Kansas City metro area. But Klumb said it’s growing and the bank is committed to it.
“This is one of our core businesses and we like it because it provides core deposits for us as well as a source of growth in accounts and deposits and revenue,” Klumb said.
Klumb said UMB is putting the finishing touches on a purchase of 40,000 Bancorp HSA accounts worth about $75 million.
Even before that acquisition, UMB ranked in the top 10 banks nationally in both HSA accounts and total assets, according to the consulting firm Devenir.
There’s just shy of 20 million active HSA accounts in the United States and UMB handles about 1 million of them.
Eric Remjeske, the president and co-founder of Devenir, said HSA use has grown at a pretty consistent clip as more employers offer the accounts paired with high-deductible, low-premium health insurance plans.
Remjeske said that’s likely to continue, regardless of what happens with the Republican health care bill.
“We do forecast pretty consistent growth,” Remjeske said.
The advantages of HSAs are tax-related.
Employees and employers receive tax deductions for contributions to HSAs. Account holders aren’t taxed on the interest they generate and aren’t taxed on withdrawals as long as they’re used for eligible medical expenses.
Critics say the plans generally favor healthy, high-income people who can use the accounts to reduce their tax payments without facing more medical bills than they can cover.
“Health savings accounts and the plans they’re paired with don’t work for most low-income, middle-income people,” said Lydia Mitts of the D.C.-based advocacy group Families USA. “They don’t work for working families.”
Klumb said the accounts are “not a silver bullet,” but they can reduce health insurance costs for employers and are good for business at UMB.
“We expect it to grow at a robust rate naturally, just as the industry is growing, and we think that we will continue to be one of the top players in the industry,” Klumb said.