MEDICAL SAVINGS ACCOUNTS
December 10, 2001

Background

MSA’s commenced as a pilot program on January 1, 1997 as a provision in the Health Insurance Portability and Accountability Act of 1996 (HIPPA). It was slated for reconsideration after four years, and legislation has extended the project through the end of 2002. It is generally conceded that the IRS will stop authorizing MSA’s at that time. If you are enrolled prior to that, however, participation is supposedly guaranteed for a lifetime. We have discussed MSA’s with CPA firms who strongly caution that such a guarantee is highly suspect and further warn that the IRS could end these programs if the nation’s budget surplus becomes a deficit. Congress has capped the program at 750,000 enrollees, but fewer than 200,000 families are enrolled as of September 2001.

MSA’s are open only to the self-employed and businesses with no more than 50 employees. They are available on an unlimited basis to individuals who were previously uninsured. In theory, MSA’s put the ability to make decisions in the hands of the consumer. Consumers will benefit from saving with tax-exempt dollars and prudent purchasing.

There are, however, numerous critics of the program including Consumers Union, publisher of Consumer Reports, as well as the previous (Clinton) administration.

Click the link below to learn more about the advantages and disadvantages of MSA's.

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