Medical Savings Accounts (MSAs)

At Issue

The Health Insurance Portability and Accountability Act of 1996 permits eligible individuals to establish medical savings accounts (MSAs) under a pilot project that began on January 1, 1997. An MSA is a trust or custodial account established to pay medical expenses in conjunction with a high-deductible health plan. To be eligible for an MSA, an individual must be either employed by a small employer that establishes a high deductible health plan, or a self-employed person covered by a high deductible health plan. The MSA account is established in the name of the individual. Expenditures from an MSA are self-administered.

Under HIPAA, contributions to an MSA may be made either by the individual or the individual's employer (but not both in the same year), and are deductible or excludable from the individual's gross income. Expenditures from an MSA are excludable from gross income if used for qualified medical expenses.

NAHU's Position

NAHU feels that for many populations MSAs can be an excellent health plan alternative. We also believe that individuals and employers should have access to as many health benefits plan options as possible. NAHU has developed recommendations concerning MSA's including accessibility, deductible amounts, using MSAs in conjunction with Section 125 and HMO plans and the inclusion of MSAs in the options that government employees can choose from.

What Others Are Saying

Detractors of MSAs believe that they would only serve both the healthy and wealthy. But others believe that most people would gain, where even the sick would be better off with a well-designed MSA than with a traditional insurance plan. Proponents believe that more flexible MSAs, with expanded eligibility, would allow more Americans to get the most from their health care dollars.

Additional Resources

NAHU comparison of HSAs, MSAs, HRAs, and FSAs

Frequently Asked Questions about MSAs

"Dear Colleague" Letter
sent by Reps. Thomas (R-CA) and Lipinski (D-IL)

MSA Overview
National Center for Policy Analysis (NCPA)

State MSA Laws
National Association of Health Underwriters

Answering the Critics of Health Accounts
National Center for Policy Analysis (NCPA)

For more information on Health Savings Accounts (HSAs), click here.

For more information, please contact John Greene, senior director of federal affairs or Megan Mamarella.

Content copyright © 1998-2008 National Association of Health Underwriters. All rights reserved.
National Association of Health Underwriters · 2000 North 14th Street, Suite 450 · Arlington, VA 22201
703.276.0220 · fax 703.841.7797 · info@nahu.org