Under this type of plan comprehensive coverage for major illnesses or accident is still covered in conjunction with the high-deductible health insurance plan. The savings part of an MSA is held by a custodian such as a bank, mutual fund, or insurance company. MSAs offer an attractive advantage which might in the future stimulate the growth of Alternative Medicine. Money from an MSA can be used to pay for services not normally covered by other group health insurance. Perhaps the greatest benefit of MSAs is the focus they place squarely on the individual for responsibility regarding health related decisions.
Individuals have the freedom to choose their doctor.
Because they benefit financially by accumulating money when medical expenses are not incurred, they are rewarded for maintaining good health. The individual, not an HMO or insurance organization, makes the determination on when to withdraw money from an MSA and has the bottom line responsibility on determining whether the distribution is used for a medical expense. The intent of the Act, responsible for the establishment of MSAs, was to demonstrate workers, when given a financial incentive, will keep doctors bills down. However, an overwhelming side effect of this Act was the establishment of a terrific tax shelter. Contributions to an MSA are not taxed.