Healthcare MSAs, creative investment options

By Carmen Brown

flash photo-2-book cover.jpg (963200 bytes)Each day brings fresh news of yet another Wall Street scandal involving restatement of earnings, insider trading or pure chicanery among large firms. Global Crossing, Enron, Anderson, Adelphia, Qwest, Rite Aid, Tyco, Imclone, WorldCom and now Xerox, have been embroiled in scandals that have resulted in bankruptcy fillings and/ or declining company stock value. The result is that investor’s confidence is at an all-time low and jittery investors are rushing to sell their stocks and rearrange their portfolios. Most distressing is that as the firms battle to remerge from the tarnish, they have become reconfigured, shedding staff in droves. WorldCom has indicated that it will lay off 17,000 of its 61,800 workforce; Enron laid off 7,000 so far from its 23,000 staff; Anderson shed 7,000 of its 21,000 workforce and expects to let go of more; while Xerox, which was recently fined $10 million by the SEC for false reporting of $3 billion in sales, now employs 74,000, down from 87,000 two years ago. As employees are let go, they invariably lose their health insurance, one of the prime perks of full time employment. But all is not lost, says Harold Foster, author of the timely health-themed financial tome, Applying Medical Saving Accounts (Palisade Business Press, $14.95), a book which touts

The importance and value of MSAs, a small-business insurance model for funding flexible healthcare needs while building employee wealth. According to the book, the Health Insurance Portability and Accountability Act of 1996, was added to section 220 of the Internal Revenue Code to permit eligible individuals to establish MSAa under a pilot project, which began in January 1997. An MSA is a tax-exempt trust or custodial account established to pay medical expenses in concert with a high-deductible health plan. Many of the rules governing the MSAs are similar to those that apply to individual retirement arrangements (IRAs). For instance, they are both created to benefit an individual so if that person changes employers or leaves the workforce, the MSA: goes with the individual. Two categories of employees are eligible to establish an MSA: a) An employee or spouse of an employee of a small business (employing 50 or fewer employees) that maintains an individual of family "high deductible health plan" covering that individual, or b) a self-employed person or spouse of such a person maintaining a high-deductible health plan. Foster uses relatively simple language to explain the advantages of investing in an MSA. In this uncertain economic climate were big business seems overrun with false earning reports and dubious accounting practices, it is the wise consumer who explores all the options available to ensure sustained health coverage, particularly when it has an investment perk attached. Call 973-427-0065 for more information about this interesting and vital book.

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Applying Medical Savings Accounts