U.S. Bancorp this week announced plans to offer employers what it says is the first product that consolidates multiple types of employer-sponsored health care benefits and reimbursements on a single payments card they can manage through the bank’s website.
The multiple-application card, available as either a Visa or a MasterCard, would enable employees to pay for health care and related costs through various benefits accounts, including health savings accounts, flexible spending accounts, health reimbursement arrangements, and accounts for dependent care reimbursement, parking or transit. The service will be available beginning in July, U.S. Bank says.
The magnetic stripe card eliminates the need for employers to provide separate cards for separate benefits programs, simplifying processes for both employers and employees, Ralph Bernstein, U.S. Bank senior vice president of healthcare payment solutions, tells PaymentsSource. “This is essentially a ‘stacked multipurse’ card that allows customers to have access to multiple health care savings and spending accounts through one piece of plastic,” he says. “And they can manage it all through a single website, greatly simplifying processes and paperwork.”
A typical consumer could for example use the card to pay for employer-sponsored health care services by tapping a health savings account for certain portions of the cost and a limited-purpose flexible spending account for other portions, depending on the employer’s benefits. “The card automatically sorts and authorizes the payments from the appropriate savings and spending accounts for the employee, who can go online and easily track the funds. It removes a lot of complexity from existing systems,” Bernstein says.
U.S. Bank tapped Minneapolis-based healthcare software and website developer Lighthouse1 LLC to help build the customized product. Total System Services Inc.’s Minneapolis-based TSYS Healthcare unit, established in 2007, will process the card transactions through a long-term agreement the bank announced in January.
At least one analyst says U.S. Bank’s offering is a first. “A lot of employers are looking for ‘one-stop shop’ solutions, and while the majority of financial institutions are only interested in offering HSAs, ... U.S. Bank is relatively rare in the banking industry in offering a [single card product] for all three account types (HSAs, FSAs and HRAs),” Red Gillen, a senior analyst with Celent, tells PaymentsSource.
Gillen expects payment cards to play “an important role” in the emerging area of consumer-directed health care, where consumers share at least part of the cost of employer-sponsored health care benefits.
The health care-reform bill Congress passed earlier this year enhances the likelihood that such consumer-directed health care payments will continue to grow, Bernstein says.
“The legislation did not affect existing HSAs and FSAs, which continue to grow,” he says. “And in its simplest terms, the legislation requires more people to have health care coverage, and it shifts health care costs to individuals. Our product is designed to make it simpler for both employers and employees to manage these various types of accounts.”
U.S. Bank is one of the nation’s leading providers of HSAs, supporting plans for some 760 employers representing about 121,000 covered individuals, Bernstein says. “Interest is very high among large employers for a card that will enable them to consolidate HSA and other types of benefits onto a single card, eliminating their need to have multiple providers and making it easier for the end user to tap these benefits,” he says.