Policy Documents

Four Years of MSAs: The Lessons So Far

July 1, 2000

In this article which originally appeared in the Medical Sentinel, the author writes that, 

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) allowed small employers and the self-employed to set up a tax-favored savings account to pay for routine medical expenses, provided they also have an insurance plan that meets some very specific requirements. The requirements include a very narrow range of allowable deductibles and strict limits on other cost-sharing provisions and MSA contributions. The limitations and restrictions make the program needlessly complex and hard to understand for both insurance brokers and customers. And the fact that the pilot program was limited to four years, and available only to a small segment of the insurance market, has discouraged many insurance providers from participating.

To date, only about 100,000 "qualified" MSAs have been established, so conducting the kind of formal evaluation that Congress originally intended is difficult. However, information gathered and research developed over the past four years helps to answer critical questions about the MSA program.