The total number of Health Savings Accounts (HSAs), which allow consumers to set aside money tax-free for medical expenses, is expected to grow to about 3.6 million with $5 billion in combined deposits, compared with 1.1 million accounts with deposits totaling $1.2 billion at the end of 2005. As a result, the number of banks that offer health savings accounts has more than tripled since the end of 2005. Nearly 1,100 banks now offer HSAs.

The abundance of new HSA offerings is triggering competition that is helping to push fees lower and expanding the options for consumers to invest their savings. HSAs typically accrue interest, but banks increasingly are offering other investment options. Bank of America this week is expected to announce plans to introduce a new credit card in partnership with major health plans that will allow holders to earn rewards points that convert to cash for their HSAs. In January 2007, customers will be able to invest their HSA balances in mutual funds offered by the Bank of America's Columbia Management arm. In addition, JP Morgan Chase later this month will begin allowing individuals to enroll in HSAs online, rather than solely through their employers. The bank also offers mutual fund investments to its HSA holders.

(Carrns, Wall Street Journal, 11/14).