AFCM Interviews American Chartered Bank President Dan Miller
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AFCM: Why offer HSAs?
DM: Having the individual engaged in making medical decisions makes all the sense in the world. The reason people don’t even know what medical costs are is that they have no incentive to pay for medicine. I know I hadn’t given much thought to health insurance costs. You just hand over your [insurance] card, pay your co-pay and somebody takes care of the rest. That’s just flawed. America has a history of being more of a free market system and that’s been our strength but the health care system encourages us to just do what we’re told and with no choice. I had read about Medical Savings Accounts (MSAs) and we had looked at offering MSAs, but we decided that MSAs were not going to have legs. We were pretty enamored of the underlying product idea and, when HSAs became law, we tried to figure the regulatory risks. When we saw that we didn’t have to do third party administration—that the burden is on the accountholder to take distributions for medical or non-medical purposes, we were predisposed to offer HSAs, which we had been looking at for our own employees. A group of lawyers turned us on to HSAs—out first customer is a lawyer who’s a longtime customer. He’s part of a Chicagoland law firm that wanted HSAs for its 15 lawyers. We knew them well and they contacted us to look at HSAs. They were like our guinea pigs.
AFCM: Who are your customers now?
DM: Most HSAs are held by small businesses, which we generally find through independent-minded insurance agents. We have a strong value product—low cost or no cost—and we don’t have service charges to open accounts. The average balance is about $ 1,000. We have several thousand HSAs and we’re adding about 600 new HSAs a month. The preponderance of customers comes from Illinois, Indiana, Wisconsin—about 70 or 80 percent from that area. They’ve seen us from the Web and, since we were one of the early adopters [of HSAs], we got some early press, too. Our customers include doctors, lawyers, people who bend metal, inject plastic, manufacturers wholesalers, distributors—and there might be a disproportionately high interest among professionals, such as small law firms. We do offer HSAs to our employees, which is educational. I was a little surprised by the pricing, which was higher than I had anticipated. We pay most of the employee’s premium.
AFCM: How does American Chartered Bank set interest rates on Health Savings Accounts?
DM: We look at the competition and ascertain a fair rate of return. Relative to others, our rates are higher. We look at Treasury markets and capital markets. Our fees are lower, too.
AFCM: What type of training do you provide to employees?
DM: We train groups of employees. I teach the first class, a customer service morning session, for each new employee. I distribute articles from newspapers and trade publications about bad bank experiences—including one that’s a 100-year–old article. I talk about real-life examples, about the bank and its foundation and philosophy. It’s important that employees understand we are successful because we are customer-focused. We also do internal customer surveys—we examine clients who leave us and those who remain with us. We judge ourselves by whether we’re better than we were last year. We compete with ourselves, not with others. Our branch employees have a general understanding of HSAs. We do not require prior banking experience—that can be good or bad for potential employees—and we look for good character traits, which are important here. In order to serve, an American Chartered employee has to have empathy. If you can’t empathize, you’re not capable of providing service to the customer—and you have to be flexible and be able to answer questions. Our Human Resources people do a particularly good job at finding the right people. 80 of our 250 employees who work here are owners [of the bank] and they recognize that customer service is a circular phenomenon.
AFCM: What challenges do you face?
DM: We’re a highly regulated industry and the regulations are becoming more prevalent. We’re seeing considerably more regulations due to the War on Terrorism, such as being asked to monitor clients and, at some level, it really is a burden. I’m not sure you’ll have people continuing to start banks. We have ten branches around the Chicago metropolitan area—with HSAs brochures at most branches—and the HSAs market is still in its infancy, so some things are unclear. You have the insured and the accountholder and the small business or the employer, and you have an insurance agent or benefit consultant and the insurance company. So, we try to figure that competitive landscape and stay relevant, while staying independent. We like to run our own company. We strive to provide the best value and, ultimately, our client is the accountholder.
AFCM: Do you offer brokerage accounts?
DM: Not yet. Maybe in the future. We think it’s most important to support the product and the need for investment services was minimal. But people should be careful. This is money that’s set aside for medical bills.
AFCM: Do you offer online account management?
DM: Yes. You can log in and use your password to see your statement and transfer funds or you can [pay medical bills] by debit card. It is a secure, security-encrypted site. You can go back several months for past statements. We send electronic statements.
AFCM: Why should someone invest in American Chartered Bank’s HSAs?
DM: Because the product is outstanding—it’s the best value out there.
Scott Holleran, Editorial Director
Copyright © 2005 Americans for Free Choice in Medicine. All rights reserved.
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