WellPoint Moves Closer to Industrial Bank

WellPoint, one of the largest health benefits administrators in the U.S., received approval Monday from the Federal Reserve to move forward with its application for an industrial bank to administer health savings accounts (HSAs) for its policyholders.

The Federal Reserve Bank of New York issued a statement Monday declaring certain parts of WellPoint's operations "complementary to a financial activity.” The designation is an important step in the application process since the Federal Deposit Insurance Corporation suspended the creation of industrial charter banks after WalMart’s failed application for one in 2005.

The FDIC had asked the Fed for an opinion on WellPoint’s application, with an eye to whether an industrial bank run by WellPoint would threaten the activity of other established banks.

"The board concludes that the proposed activities do not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally," said the Fed in a statement.

WellPoint is the largest member of the BlueCross BlueShield Association and is the BlueCross licensee for California and the BlueShield licensee for several states, including Colorado, Georgia, Missouri, New York, Ohio, and Virginia. The company also operates under the UniCare and Anthem brands. The company offers many health insurance-type plans such as PPO, HMO, and point-of-service plans.

WellPoint will base the bank in Utah and use it to offer “financial services to policyholders, including managing money in health savings accounts,” Jim Kappel, a WellPoint spokesman, told Bloomberg News.

HSAs are tax-advantaged medical savings accounts available to taxpayers who are enrolled in a High Deductible Health Plan.