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Additionally, some have feared that MSAs could be used by the
very wealthiest -- who can pay out of pocket for even the most expensive care
-- simply as a tax shelter.
Partly in response to these criticisms, the HIPAA law capped
the number of allowable MSAs at 750,000 and limited them to self-employed
individuals or employers with less than 50 workers. It also imposed minimum
deductible requirements and restrictions on amounts that could be contributed
Since that time, less than 100,000 MSA accounts have been
formed. Scandlen says the restrictions have inhibited the growth of MSAs
unnecessarily. He also disputes the notion that such accounts are only for the
wealthy and healthy, citing research by the Rand Corporation showing that MSAs
have broad appeal across income groups.
Now, there is reason to believe that the vision of MSAs may not
have faded entirely. One patients' bill of rights proposal, sponsored by
Republicans in the House of Representatives, contains a provision that would
remove the restrictions currently imposed on MSAs. And during his campaign,
President George W. Bush expressed support for medical savings accounts.
Scandlen also says that some businesses confronting high
employee healthcare costs are beginning to develop MSA-like products for their
workers -- even if they are not being called medical savings accounts.
"The same notion is taking on different forms,"
Scandlen says. "When HIPAA first passed, most [employers] were moving
toward managed care. In the past five years, that attitude has changed
dramatically. Now large employers are thinking that some kind of cash account
for employees to pay directly for services makes sense."
Still, he acknowledges that only 20-25 insurance companies are
offering MSA products -- most of them small companies that still offer
indemnity-style insurance. "Until the big guys get in, I don't see a lot of
growth," he says.
So while they are not the hot ticket they were five years ago,
MSAs should probably be kept in sight -- if only out of the corner of one's
Are they good for you?
"They are good for the wealthy, and they are relatively
good for the healthy as long as they remain lucky and don't get sick and can
accumulate enough to cover their deductibles," Nichols tells WebMD.
"There are some cases where people who have a chronic illness but have
relatively low expenses can benefit because the premium is lower and the
contribution is tax deductible."