Newspaper article THE JOURNAL RECORD

Medical Savings Accounts Offer Healthy Remedies for Self- Employed

Newspaper article THE JOURNAL RECORD

Medical Savings Accounts Offer Healthy Remedies for Self- Employed

Article excerpt

NEW YORK -- Anyone who's self-employed knows what a headache it is finding affordable health care coverage for themselves and their workers.

The best advice from the financial doctors: Take two aspirin and call for an MSA in the morning.

Medical savings accounts, or MSAs, were established earlier this year through the federal Health Reform Act of 1996 as sort of an experimental remedy to help control costs. The accounts combine a high-deductible insurance policy with a tax-sheltered savings account that can be used to pay out-of-pocket medical expenses, like routine doctor visits or prescriptions. Over the next four years, up to 750,000 eligible taxpayers -- those who run their own business and employees of companies with fewer than 50 employees -- may set them up on a first-come, first- serve basis. Response so far has been tempered, despite the program's limited nature and the high praise from both financial and medical practitioners. Only a select group of banks and insurance carriers offer them right now. "It's slower than we would like," said Dr. William T. Terry, managing partner for American Health Value Medical Savings Account in Boise, Idaho. The company has set up around 2,000 accounts nationwide since January in conjunction with First Federal Savings of Nampa, Idaho. Its goal is to have 100,000. But Terry and others think business will pick up soon as more financial institutions enter the fold and as individuals become more familiar with the concept and numerous perks. "It's a gangbusters plan for anyone who can't count on Medicare or other features of traditional medical planning," said Robert K. Heady, publisher of Bank Rate Monitor, which is tracking these accounts. "It's a very good idea." The most appealing part is the tax benefit. Annual MSA contributions are tax-deductible, earn interest tax- deferred and withdrawals tax-free so long as they're used for medical expenses. It's a little like an individual retirement account -- only better. In fact, some financial experts contend MSAs could supplement regular retirement accounts, like IRAs and 401(k) plans. Neither Congress nor the president intended it to be this way, but MSA holders don't even have to use money from the account for their uncovered medical bills. …

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