GOVERNMENTMedicare reform opens up health savings accounts to allRepublicans hope the new product will reverse the growth in Medicare spending, while Democrats claim it's just another tax shelter for the rich.By Joel B. Finkelstein, amednews staff. Dec. 22/29, 2003. Washington -- Now that health savings accounts have been made part of the law, the test will be whether the accounts prove popular with consumers and insurers. Passed as part of the Medicare reform package, HSAs are tax-free accounts that must be paired with high-deductible health insurance. They expand broadly on the medical savings accounts project approved by Congress in the 1990s. The new law allows anyone, not just employees of small companies and the self-employed, to start the accounts. Unlike MSAs, both workers and their employers can contribute to the accounts. Patients can use them to pay for medical needs without being taxed, even after retirement. Unused HSA funds can be carried over from year to year and transferred from job to job. Funds can be spent on such expenses as doctors' appointments, prescription drugs, long-term care insurance premiums, COBRA premiums and health insurance premiums for those receiving unemployment benefits. Medicare beneficiaries can use HSA money to pay managed care and standard Medicare premiums but not Medicare supplemental premiums. For the accounts to be useful, the insurance industry would have to develop more high-deductible products that would be used in combination with HSAs. In addition, more employers and individuals would have to take up the accounts than was the case with medical savings accounts, experts said. But some economists worry that the accounts will become just a tax shelter for wealthy people. Opponents said the accounts potentially could undermine the health insurance risk pool by pulling young, healthy patients out of the comprehensive coverage market. [...]Full text of American Medical News content is available to AMA members and paid subscribers.
Copyright 2003 American Medical Association. All rights reserved.
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