In what is expected to become a crowded market, it sometimes takes something extra to differentiate yourself. When Minneapolis-based U.S. Bancorp debuted its new Health Savings Account (HSA) last month, it went beyond the standard product, which is a tax-advantage deposit account from which customers can pay their health care expenses. The U.S. Bank product also provides online tools that enable customers to compare health care coverage plans and estimate how much coverage they will likely need.

"Banks are finding it is hard to market HSAs without providing customers with the tools they need to make intelligent decisions about their health care savings requirements," says Joe Donlan, vice president of business development at Chicago-based Subimo LLC.

Minneapolis-based U.S. Bank is the first bank to offer its customers the Web-based Coverage Advisor tool developed by Subimo. But a number of banks are looking at similar offerings as part of a general trend to include more information about health care costs along with their savings plans, Donlan says.

Coverage Advisor has been offered by health care insurance providers to their customers for the past 18 months, Donlan says, adding that Subimo began marketing the technology to banks when it saw the growing number of financial institutions looking to offer HSAs. Although only a couple of dozen banks are believed to offer HSAs today, the number is expected to build as consumers and small businesses show more interest in the accounts.

In just the last month, both U.S. Bank and Cleveland-based National City Corp. announced new HSA offerings. Forrester Research says more than 2 million HSAs exist today, but expects that number to grow to 12 million by 2007.

HSA customers at U.S. Bank's Web site will be able to compare various health care coverage plans based on their family's health care needs and the region where they live. After stating family members' ages and health care requirements, customers can use an online calculator to estimate the cost of subscribing to the various plans and the likely out-of-pocket expenses with each, which would suggest how much to put away in the HSA. They can also use the tool to determine how much they would need to save in order to provide for long-term future health care needs, Donlan says.

Steve SaLoutos, U.S. Bank senior vice president of consumer products and services, said in a statement that the new account was part of a strategy to give customers "a thoughtful, valuable solution to what may otherwise be a financial challenge."

U.S. Bank wouldn't comment further. But Donlan says U.S. Bank and other financial institutions are also looking at related functions that enable customers to compare the costs of generic and private-label drugs and the costs and quality of local hospitals based on specific procedures, such as open heart surgery. The tools would reveal the average cost of such surgery for each local hospital and how each hospital is ranked for that procedure.

Other vendors expect to begin offering similar health-related features. James W. Sizemore, senior vice president and CIO for Information Technology Inc., a unit of Fiserv, says his company is currently putting together a suite of health care-related, value-added services as part of its business to process transactions and help banks manage their HSAs. This suite is likely to include tools that allow HSA accountholders to calculate anticipated health care expenses, find out the typical costs of various types of elective surgery, and find lists of health care providers who are ranked based on the quality of service provided.

Neither U.S. Bank nor Subimo would reveal how much U.S. Bank paid for the Coverage Advisor tool. However, a Subimo spokesperson said the tool is sold as part of a licensing agreement with the negotiated rate based upon the functions requested by each institution - only the financial calculations tool, perhaps, or with the added ability to compare health care providers -- as well as by the number of customers signed up for HSAs.

For more about HSAs, see "Taking the HSA Off The Shelf" in Banking Strategies.

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