Ambest Road, Oldwick, NJ 08858
Press Release
CONTACT: Jeffrey Dunsavage
(908) 439-2200, ext. 5618
Dunsavj@ambest.com
OLDWICK, N.J., July 28, 1997 -- Over 40 insurers are marketing medical savings accounts - the tax-advantaged instrument Congress created last summer - and there is plenty of room for more participants, according to an article in the July life/health edition of Best's Review.
MSAs - which provide for tax-free savings, tax-free payment of medical bills and tax-free use of the savings for any reason after age 65 - appear to satisfy a need for a significant segment of the population. Low premiums and the opportunity for tax- advantaged saving are attractive to people who cannot afford health insurance at market prices but who earn too much to be eligible for Medicaid. The plans are selling steadily, though well below the threshold imposed by Congress when it created these plans. So far, the main market consists of small businesses and self-employed individuals, many of whom previously were uninsured.
"What we're really getting now are the early adapters," says Dan Perrin, executive director of Eclipse MediSave America Council, a pro-MSA group. "The early demand doesn't represent the real demand out there. It represents those people willing to try something new."
Opponents, however, fear only the wealthy and the healthy will buy policies, at the expense of the middle class and the sick. Iris Lav, associate director of the Center on Budget and Policy Priorities, argues that MSAs "break the insurance principle." Unused money in the savings accounts is lost to the health care system, and this augurs well for those who stay healthy and bodes ill for those who become sick.
To avert adverse selection, Congress limited to 750,000 the number of MSAs that may be sold through 2000 and has directed the IRS to monitor sales. MSAs can only be purchased by the self-employed or through firms with 50 or fewer employees. The plans attract a large concentration of people in sales careers, construction workers, carpenters, mechanics and farmers. Also benefiting from the plans are small professional offices, such as doctors, lawyers and veterinarians.
The apparent success of and increased interest in MSAs may lead to the cap being lifted. "If there's public interest in this, I think Congress and the Administration will listen," says Martin Rosen of NYLCare Health Plans Inc.
Businesses are likely to become MSA supporters. While insurers provide the high-deductible coverage, banks, brokerage firms and special third-party administrators are lining up to administer the accounts.
Best's Review is published monthly by A.M. Best Co. Members of the media can obtain a copy of this article in its entirety by calling Jeffrey Dunsavage at (908) 439- 2200, ext. 5618. All others may call (908) 439-2200, ext. 5742.
A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source.
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