Webster Financial Corporation has agreed to acquire JPMorgan Chase Bank's Health Savings Account business, according to a statement from Webster.
The deal, which is subject to regulatory approval, will affect approximately 700,000 accounts with an estimated $1.3 billion in deposits.
HSA Bank, the division of Webster Bank acquiring JPMorgan's HSA business, will see its total number of accounts double, pending regulatory approval.
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The acquisition will mean HSA Bank will oversee nearly $4 billion in HSA accounts, according to James Smith, CEO of Webster.
"HSAs are growing rapidly and transforming the way consumers use and pay for health care," Smith said, who explained that HSA accounts provide a stable source of growth for the financial services firm.
First marketed in 2004, HSAs are emerging as a valuable marketing tool for advisors to defined contribution plans, as saving specifically for health care costs has become core to sound advisor strategy.
Employee Benefits Research Institute data shows that contributing the maximum amount to an HSA over 40 years could mean between $360,000 and $1.1 million in savings, depending on different rates of return, and presuming none of the money is withdrawn.
Because of their tax advantages, some advisors claim HSAs are a more efficient way to prepare for health care costs in retirement, as opposed to simply using 401(k) assets.
Health care costs are expected to skyrocket in the coming decades. A recent HealthView Services study projected the Medicare premiums of a hypothetical Massachusetts couple, aged 55, as being more than $44,000 a year in 2044, when the couple is 85.
HSAs are funded with pre-tax dollars, and distributions for qualified medical expenses are not taxed.
Nor are annual distributions required after age 70. And they also are not taxed upon the account holder's death.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
