A Medical Savings Account (MSA) provides coverage to meet your employees essential health care needs. This is an often overlooked and misunderstood opportunity for health coverage for small employers and employees.
 

What is an MSA?
It is a tax-favored account established to pay for future qualified medical and dental expenses. Funds contributed to an MSA, which is established through a qualified financial institution, may be used to pay medical deductibles when combined with a high deductible medical plan.

Who is eligible?
If you wish to set up an MSA, your employees must meet the following qualificatioins:

• Employees or spouse must be either an employee of a business with at most 50 employees and offering a high deductible medical plan, or self-employed.

• Employee cannot be covered under any other medical plan. Employee may carry a low deductible coverage for long-term care, accidents, disability, dental care, or vision care. Employee may also have illness-specific per-diem hospital insurance workers' compensation, torts or property policies.

Advantages/Benefits
Tax Savings
An MSA offers an oppurtunity for long term tex-deferred and/or tax-free savings, while, at the same time, providing better     control over medical, dental and insurance spending. Incentives for establishing an MSA include:

• Funds contributed to the MSA may be tax-deductible (up to specified limits)
• MSA funds could be used for non-taxable distributions for qualified medical and dental expenses
• MSA monies can be accumulated on a yearly basis and may earn tax-free interest

• In most cases the lowest monthly rates for healthcare
• Financial protection against major health care expenses

• Employers and employees can make contributions to the MSA
• MSAs are portable. This means that if an employee changes employers, the MSA remains in the employee's control
• Prescription drug benefits
• Access to a large network of providers and specialists