Medical Savings Accounts (MSAs) are promoted as
salvation of small businesses in desperate need of affordable health insurance plans. Forbes called MSAs "Super-IRAs" and Business Week wrote "almost too good to be true". Kiplinger’s Personal Finance Magazine said “if you are self-employed, you should jump at chance to open an MSA”. The American Medical Association published a series of articles strongly supporting MSAs and these plans are promoted on AMA's insurance Web site. Both Clinton and Bush administration and almost all federal lawmakers on both parties include MSAs as part of solution to national health care crisis. The insurance industry and employee benefit industry strongly support use of MSAs. Business think tanks across country repeatedly focus on ideas to expand use of this promising financial tool in marketplace.Here are some things you should know before you consider switching health plans to a MSA:
1.MSAs cut overall long term health costs by about 1/3 for most people but they are not designed to cut your immediate cash outlay for medical plan. For example, if your family pays $650 per month for total medical and dental coverage right now, you should still plan to pay $650 per month in a new MSA plan. The only difference is that about half of your cost will go directly into your own account and only about half will go to insurance company. Over long run, your account will be spent more effectively on your behalf than money paid for insurance premiums. But it takes time (usually about a year) to build up enough reserve in your account to be fully secure using higher deductible insurance.
2.At least 1 in 3 people who apply for a MSA plan do not qualify or are not good candidates for a MSA because they do not achieve any net savings in overall health costs when switching to a MSA. Those most likely to save most money are young, self-employed, and healthy with historically few medical expenses. Those over age 60 generally do not realize any savings, but may achieve an improvement in quality of health care by moving away from managed care healthcare systems to a private pay system. Qualification, rating and enrollment for individual and group MSA plans are handled by MedSave.com by telephone at (877) 529-7435.
3.MSAs put individual consumers and their personal physicians back in control of their own health care. This also means that each individual must be responsible for his/her own health care decisions. This approach of self-reliance is not always popular or appropriate for everyone, especially those who have become comfortable with HMO plans. MSAs are designed to encourage efficiency and cut waste in health care. But this also means that there is a chance that you may decide to bypass some medical testing or treatment in order to save your MSA money.
