March 21,2007

Dennis A. Stover, Vice President

HealthEquity Inc.

1276 South 820 East, Suite 201

American Fork, UT 84003

Re: NCUA Insurance Coverage for Health Savings Accounts.

Dear Mr. Stover:

You asked about the availability and scope of NCUA share insurance for
an account holding funds invested by individuals in Health Savings
Accounts (HSAs) at a federally-insured credit union. HSAs qualify for
NCUA share insurance if the owner of the funds is a member or otherwise
eligible to maintain an account in an insured credit union; funds may be
insured as an individual account or, if a qualified payable-on-death
beneficiary is named, as a revocable trust. 12 C.F.R. §§745.0, 745.3,
745.4. You also asked if an HSA would qualify for NCUA insurance if the
funds' custodian is the credit union or a vendor. The custodian's
identity does not affect the insurance coverage.

HSAs are tax-advantaged savings plans defined in the Internal Revenue
Code as trusts created exclusively to pay the qualified medical expenses
of the account owner beneficiary. 26 U.S.C. §223(d)(1). Banks, credit
unions, insurance companies, and any other person "who demonstrates to
the satisfaction of the \[Treasury\] Secretary that the manner in which
such person will administer the trust will be consistent with the
\[statutory HSA\] requirements" can serve as an HSA trustee. 26 U.S.C.
§§ 223(d)(1)(B), 408(n), 816. NCUA regulations implement this statutory
authority and permit federal credit unions (FCUs) to act as HSA trustees
or custodians. 12 C.F.R. §721.3(l). State law determines whether
state-chartered credit unions have authority to serve as HSA custodians
and trustees.

The HSA statute contemplates that HSA owners can designate a beneficiary
to receive any balance remaining after their death. 26 U.S.C.
§223(f)(8); [see]{.underline} [also]{.underline} 69 Fed. Reg. 29907,
29909 (May 24, 2004). Where an owner has designated a qualifying
beneficiary, meaning a spouse, child, grandchild, parent, or sibling,
NCUA provides additional insurance of up to \$100,000 per beneficiary,
separate from any individual accounts of the owner. 12 C.F.R. §745.4(b).
If an HSA owner does not identify a qualifying beneficiary, the funds
are added to any other individual accounts of the owner and insured to
\$100,000 in the aggregate. 12 C.F.R. §§745.3, 745.4(c).

NCUA's general account insurance principles require a credit union's
account records to identify the account as an HSA for it to receive
additional insurance coverage for any qualifying beneficiaries. 12
C.F.R. §745.2(c)(1). The account records also must disclose the names of
the settlor (grantor) and the trustee. 12 C.F.R. §745.2(c)(2).
Generally, a credit union, other than a low-income designated FCU,
cannot accept HSA funds from individuals outside its field of
membership, as the funds would not qualify for share insurance. 12
C.F.R. §§701.34, 741.9, 745.0.

HSAs are often marketed to individuals through the sales agents of
health insurance companies and this process may involve the sales agent
signing up individuals as members of a credit union. For FCUs, the sales
agent can act on the credit union's behalf to verify the individuals'
membership eligibility and take their membership applications. We note
an individual who is within the FCU's field of membership must complete
and sign a membership application, purchase (or pay the initial
installment on) one share, and pay any applicable entrance fee. 12
U.S.C. §1759b; FCU Bylaws article II, section 2. The individuals need
not establish or maintain a separate share account to qualify for FCU
membership, as the HSA investment can fulfill the one share requirement.
OGC Op. 94-0424 (May 2, 1994). For state-chartered credit unions, we
defer to the opinion of the appropriate state supervisory agency on the
matter of how membership must be established.

Lastly, we note, where a sales agent is involved, insured credit unions
may need to pay particular attention to how certain regulatory
compliance matters will be addressed, for example, customer
identification requirements and consumer privacy disclosures. 12 C.F.R.
Part 716; 12 C.F.R. §748.2(b)(2). It may be necessary for an HSA sales
agent to be familiar with the regulatory requirements but, in any event,
it remains the insured credit union's responsibility to ensure
compliance with applicable regulatory requirements.

Sincerely,

/S/

Sheila A. Albin Associate General Counsel

OGC/RMM/SAA:bhs

07-0113