Health Savings Accounts (or HSAs) hold out the promise of a 401(k)-like distribution avenue for the fund industry. Until now, though, that channel has remained theoretical as few if any plan administrators have allowed participants to invest their funds. That may be starting to change. This week, for example, United Healthcare affiliate Golden Rule Insurance Company took the wraps off an HSA product that offers participants the choice of eight mutual funds as investments.

Golden Rules Funds

The initial "core" funds offered in Golden Rule's HSA program: John Hancock Classic Value Vanguard Wellington Neuberger Berman Fasciano Vanguard Global Equity Vanguard S&P 500 Index John Hancock High-Yield A PIMCO Real Return Fund John Hancock Money Market

Source: Golden Rule Insurance Company

"The mutual fund options greatly enhance the long-term savings potential for our HSA customers, while other new consumer-friendly capabilities expand consumers' choices and the ease of using their HSA," explained Golden Rule CEO Rich Collins.

Though it is still early to accumulate assets in these programs, it may not be too early to win shelf space. The few mutual fund firms that have grabbed significant assets in the 401(k) industry without operating their own recordkeeping platform, took that market share by allying early with recordkeepers. That strategy was followed with great success by Janus, Templeton, Pimco and a handfull of others. Those early funds often have kept their position in plans thanks to participant inertia. It looks like that history may be repeating itself.

The list of fund firms on Golden Rule's HSA platform is only four deep: John Hancock and Vanguard with three funds each, and Neuberger Berman and Pimco with one each. Meanwhile, Exante Bank acts as the custodian for the program.

Indianapolis-based Golden Rule launched its first HSA more than a decade ago and now claims that more than 41 percent of its customers are covered by health insurance plans that include health savings accounts. Assets in those accounts totaled more than $170 million at the end of June. That would make the program equivelent to a mid-market defined contribution plan.

Still, it is early in the game. The average Golden Rule HSA account balance is just $2,400. That does not leave a lot of funds for the participants to invest. The insurer requires that each participant have more than $2,000 in his or her account to take advantage of the program.  

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