What's Next for Medical Savings Accounts?
Last year Congress made tax-free Medical Savings Accounts (MSAs) available to 750,000 American workers and their families. Under a provision of the Kassebaum-Kennedy health insurance reform bill, small employers (50 or fewer employees) and the self-employed can purchase less expensive high-deductible health insurance policies and make tax-free deposits to an MSA. They can use their MSA money to pay small and routine health care expenses, reserving insurance to pay large, catastrophic expenses. Money that remains in the account at year's end earns tax-free interest.
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