Leading HSA provider brings Transmerica's retail menu to account holders. Health-savings account holders at HSA Bank now have access to investment services through Transamerica Financial Advisors . HSA bank, one of the first financial institutions to offer health savings accounts, is a division of Waterbury, Conn.-based Webster Bank.

The idea is to go give HSA account holders the opportunity to invest in marketable securities and so, potentially at least, build their health-care nest eggs. Los Angeles-based Transamerica is an independent broker-dealer owned by the Dutch insurer AEGON.

Webster has a small brokerage business of its own, but describes it as "limited" in terms of investment offerings compared with Transamerica, which provides access to about 15,000 mutual funds, as well as separately managed accounts, stocks, bonds and unit investment trusts.

This is the first such investment hook-up for health-savings account holders, at least as far as Webster knows. But then health-savings accounts have only been around for about two years, coming out of the Medicare Prescription Drug Act of 2003, and replacing the provisional medical-savings account, which first appeared in 1997.

Health-savings accounts are meant to give those eligible - retirees, for the most part - a tax-advantaged method to pay for qualified medical expenses and to give others a tax-exempt means to start saving for such expenses before they become eligible.

Mass affluent

There were about 1 million health-savings accounts at the end of 2005, according to industry sources cited by HSA spokeswoman Becky Seefeldt. She says HSA is home to about 150,000 of them, worth about $280 million, including about $30 in self-directed accounts.

That makes for an average account size of about $1,900 - hardly high-net-worth territory at first glance. Appearances are notoriously unreliable, however. Seefeldt says that most of HSA's account holders - especially those who aren't yet drawing down their accounts - are "business owners and professionals" - in short, folks with fair potential to become at least low-tier millionaires.

And even if health-savings accounts aren't headed up the high-net-worth chain - perhaps, as with 529s, the super-rich will view them simply as a waste of tax exemption - they seem to be growing in numbers and overall bulk. The Financial Research Corporation , a Boston-based consultancy, says there could be more than 8 million health-savings accounts with combined assets of $50 billion by year-end 2010. Chicago-based DiamondCluster International, another consultancy is even more bullish, seeing 15 million to 20 million health-savings accounts with a total of $75 billion in assets by mid-year 2009.

HSA, which sees itself with nearly 4 million health-savings accounts by 2012, became part of Webster early in 2005, when Webster Financial, the Connecticut bank's parent, bought Sheboygan, Wisc.-based State Bank of Howards Grove (SBHG), stripped out its core health-savings account business, and sold SBHG's two branches to Fond du Lac, Wisc.-based National Exchange Bank and Trust.

Webster got a lot more ink a few months later when it bought New Haven, Conn.-based J. Bush & Co., a firm founded by the U.S. president's uncle. Late in 2003 Webster, a fairly acquisitive company, bought the trust business of Phoenix Wealth Management , a Hartford, Conn.-based asset management and insurance underwriter. -FWR

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