Content area
Full text
The Idaho medical savings account program, once a tangled mess of regulations, has received strong praise since the 1994 law that set it up was reworked early this year.
The law allows individuals and businesses to set up savings accounts to help pay for medical expenses. Up to $2,000 a year from the account used to pay qualified expenses is exempt from state income taxes.
In theory, the program should save employers money because they provide lower cost health coverage to employees through "catastrophic" policies that carry much higher deductibles (usually between $1,000 and $5,000 a year) and lower premiums than regular policies.
While the changes in the law have freed banks and other financial and health institutions from having to closely monitor the accounts, businesses and individuals haven't exactly been flocking to the program.
"MSAs are a real popular concept to people," said Mike Brassey, director of the state Department of Insurance. "Right now, there seems to be two competing concepts--MSAs and managed care."
Health officials agree that MSA's problems center on a lack of awareness about the program, especially about the recent changes, and a clear understanding of how it works. The fact that MSA's aren't exempt from federal income taxes also is a major impediment, they say.
Those problems don't mean there isn't any interest in the program. Barbara Strickfaden, executive director of the Idaho Bankers Association, says about a half-dozen banks in the state have either set up or are planning to open MSA accounts. West One Bank and D.L. Evans Bank in Burley are two financial institutions currently advertising the accounts.
Ada County is setting up a MSA for its employees. Blue Cross of Idaho also is putting a program together.
The MSA concept is simple --allow a business or individual to set up an account dedicated to pay for qualified medical costs. Businesses that set up the accounts for their employees could fund them with savings in premium payments. In some cases, employees may be asked to contribute to the fund.
"The theory is the employer makes money because the (medical) coverage is cheaper," Brassey said.
Other provisions of the law:
* Anyone can establish a MSA account with an authorized depository. There is no limit on the amount...