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President's Message
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| A recent Times Union editorial (September 17)
entitled "Increase Choice" spells out eloquently the case for Medical Savings
Accounts (MSA), also known as "Medical IRAs". Jacksonville area physicians and
their patients have had a long time interest in MSAs, but until recently the insurance
industry has been lacking in providing a high quality MSA product. Now, it appears that
they are back to stay, and under active consideration by many area businesses. The overall concept is relatively simple. Allow individuals the option to deposit their employer paid health coverage premiums into a personal medical IRA. Coupled with a standard high deductible insurance policy, these saved dollars become a lifelong investment in good health, as well as serving as a safety net in case of illness. Equally important as the financial benefits, MSAs allow individuals to take back complete control of their own health care. A MSA patient selects his/her own physician, participates in multiple drug discount purchase plans, undergoes procedures in hospitals and/or outpatient centers chosen jointly with their physician, and has the peace of mind knowing that any illness exceeding their deductible is covered. In short, the MSA removes the contrived restrictions and often ill-fated intrusions of managed care, and once again puts medical care back on the foundations of a strong physician-patient relationship. Rep. Bill Archer, Chairman of the House Ways and Means Committee believes that if pending legislation is passed (eliminating restrictions preventing larger companies from offering medical IRAs to their employees), health insurance could be brought to an estimated 44 million Americans with no coverage. However, as the Times Union editorial correctly points out, the "control freaks in government" (and in the insurance industry), are poised to kill medical IRAs. Rep Charles Rangel, senior Democrat on the Ways and Means Committee is touting the tired rhetoric that medical IRAs appeal to younger, wealthier, and healthier people, leaving those less healthy and older to pay higher premiums for traditional coverage. In fact, the experience of companies like Golden Rule and Forbes with a medical savings account product have shown that Rep. Rangel's argument is unfounded. In this election year, where both parties are giving high priority to health care proposals, it is clearly time to expand the dialogue to include expansion of the medical IRA law. Let individuals have the opportunity to take control of their own health dollars. In the words of Chairman Archer, "There is no justifiable reason to deny people this option." The Duval County Medical Society is actively discussing ways to bring MSAs back into the forefront of insurance products in Jacksonville. Physicians should immediately understand the many significant potential benefits of MSAs, and adopt a leadership role in promoting the expansion of MSA options. A Brief Primer on Medical Savings accounts: Who Can Have An MSA? Individuals who are self-employed including sole proprietors, general partners or 2% or larger shareholders of S-corporations. Employees of a business with 50 or fewer employees. What Type Of Insurance Is Required? A high-deductible health insurance policy is required to be eligible for an MSA. The annual deductible in 1999 must be between $1,550 and $2,300, for individual coverage and $3,050 to $4,600 for family coverage with a maximum out-of-pocket of $3,000 and $5,500 respectively. What Are The Tax Advantages? Contributions to MSAs are deductible from an individual's federal gross earnings and are not subject to withholding, estimated taxes, or Social Security (FICA). Select states also allow MSA contributions to be deducted from gross earnings. Employer contributions to MSAs are excludable from gross income, and are not subject to withholding for income tax nor other employment levies such as Social Security and unemployment taxes. Who Can Make Contributions To An MSA? Either a qualified individual or an employer can make a contribution during a year, but not both. How Are Distributions Made From An MSA? An account holder can receive distributions from an MSA at any time. The intention is to use this money to pay for eligible medical expenses. Eligible medical expenses are defined under section 213 of the Tax Code and include, but are not limited to physician, dentist, and chiropractor visits as well as medical services and prescriptions. Any funds withdrawn to pay for non-eligible medical expenses are subject to taxes and penalties. Most MSAs allow account holders to pay by check, debit card, or even standard credit cards linked to the MSA account. What Happens To The MSA Savings Balance At Year-end? The money remaining in an MSA at year-end belongs to the account holder. It can be used for future medical expenses or retirement. October, 2000/ Jacksonville MedicineWhat's New
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Northeast Florida Medicine Journal ·
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Duval County Medical Society
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555 Bishopgate Lane
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Jacksonville, FL 32204 |
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