To date, the MSA has been a national best-kept secret. A simple concept, the MSA separates routine health care expenses from catastrophic expenses. With an MSA, an individual combines a personal savings account with a medical plan that has a lower premium and higher deductible. The savings from lower premiums go into the personal savings account where they can be used to pay for routine medical care. Money left over in the MSA, at the end of the year, can be withdrawn or rolled over to grow tax-free.
Money accumulates from year to year and with interest-bearing accounts, benefits from compounding.
To get the tax exemption, a high deductible health insurance policy is required. The charge has often been made that government and insurance coverage insulate consumers and providers from the true cost of care. And truthfully, health care is the only market in America in which customers are spending someone else s money, removing the incentive to be cost conscious. MSAs open the health care industry to the wonders of free market in which patients have a voice in deciding which doctors to see, which medicines to take, and which tests to undergo, instead of forced compliance with HMO and attempts to restrict or deny care by insurance companies. MSAs do have a learning curve, but the effort is worth it.