Who Will Jump Into the MSA Pond? - Len M. Nichols

Posted by CHPRE Staff Publications Tuesday, October 1st, 1996

Introduction:

After two years of fierce debate, tax-free medical savings accounts are about to become a reality. Or at least a partial reality. The compromise hammered out by Republican and Democratic lawmakers calls for a four-year trial of MSAs to begin in January. But there are limits on participation there’s only room for 10 percent of the small group market-and restrictions on the way accounts are set up and operated.

While there is no doubt that MSAs will be attractive to many small businesses-especially those whose employees are relatively healthy and affluent the danger is that some employers and self-employed individuals will jump into the MSAs with little understanding of the financial risks. They’ll need a better understanding of what MSAs are, how the MSA experiment will work and how it could affect non-users by altering the dynamics of the small group market.

Unfortunately, no magic formula can determine precisely which small businesses would benefit from trying MSAs and which would jeopardize their own interests and those of their employees. An employer could turn to a trusted third-party administrator, insurance broker or benefits consultant for specific advice, but these general guidelines make it possible to hazard some educated guesses.

 

“Who Will Jump Into the MSA Pond?” Business and Health, October 1996.

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