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Medical Savings Accounts: Legislation in the 105th Congress

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Publication Date: March 1998

Publisher(s): Library of Congress. Congressional Research Service

Series: 97-643

Topic: Health (Health care financing)


Medical savings accounts (MSAs) are tax-advantaged personal savings accounts for unreimbursed medical expenses. In the 105th Congress, a number of bills have been introduced to expand the MSA demonstration that Congress authorized in 1996 for employed individuals not yet eligible for Medicare. Bills have also been introduced to authorize MSA plans under the Federal Employees Health Benefits Program (FEHBP).

The Balanced Budget Act of 1997 (P.L. 105-33) authorized a limited number of Medicare MSAs under a demonstration beginning in 1999. One of several new options to traditional Medicare, “Medicare+Choice MSAs” will be coupled with health insurance that has a high deductible but could offer additional benefits such as prescription drugs. Both the health insurance premiums and MSA contributions will be paid from Medicare capitation rates that vary by county and are adjusted for age, gender, and other risk factors. One bill has been introduced to remove limitations on participation in Medicare+Choice MSAs.