MSAs

Today, more than ever individuals should be concerned abouttheir retirement savings, and if they will have enough to seethem through their golden years. Currently, social securitybenefits are all that many Americans have to see them throughtheir retirement, and with inflation, escalating medicalexpense, and prescription drug costs, many senior citizenssimply cannot make ends meet on their fixed incomes. In additionto these concerns, many of our citizens known as the "babyboomers" are reaching retirement age. With more and more of ourpopulation retiring, the need for adequate funding is an everincreasing concern for all individuals. MSAs, or medical savingsaccounts, are an excellent tax deductible way to save for yourfuture, and provide for emergency expense at the same time.Prior to 1999, there was no such creature as an MSA, nor wasthere the existence of a 100% tax deduction for medicalinsurance premiums paid by an employer. Today, thanks to a billpassed in Congress, all taxpayers have access to MSAs as a wayto save and look ahead to possible medical emergencies. Whatbenefit exactly do MSAs provide? MSAs can provide a gap betweenindividuals who are uninsured, and the ability to affordadequate health care. The contributions to MSAs are taxdeferred, and this acts as an additional incentive forindividuals to make a contribution.With all the fluctuation of the stock market, investments thatindividuals had in the stock market, may or may not stillprovide adequate funding for their retirement. Many individualsthat had retired and placed their funds in stocks have now foundthat they must return to work, even if only part-time, in orderto maintain their current standard of living. That's a place noretired individual wants to be. The MSA plans offer less of areturn, buy they're also a much safer option. Today, the MSAlanguage is being replaced by the HSA language. What are theirdifferences? The original HSA was created during the MedicareReform Act of 2003, and the currently combine high-deductiblehealth insurance with a personal savings account for medicalexpenses. The money that an individual deposits in the HAS isallowed to grow tax-free, and can be used penalty free topurchase health care, or pay for services not covered by theirinsurance plan. Any monies not used, are allowed to remain inthe HSA completely tax free, for an indefinite number of years.There aren't any basic differences, except that the HSA billallows for more freedom of choice in making decisions about thewithdrawal of the saved monies, and the linking of a savings tothe requirement of obtaining health insurance.Many supporters of the HSA reform have suggested that a coupleof things happen in order for the individuals who own the HSAsto have more control over their medical decisions, and toencourage more savings, and more competition among insurancecompanies. First, they would like to see the individualcontribution limit increase to $8000 for singles and $16,000 formarried couples. Second, they would like to eliminate therequirement that HSA holders obtain health insurance, andinstead allow tax-free withdrawals from the HSAs to pay forhealth insurance premiums as well as health care. Would thishelp a struggling healthcare reform? Quite possibly, since moreof the public would be encouraged to participate if the healthinsurance premiums and health care services could be paid forwith tax-free dollars. The biggest catch to the passage of sucha proposal is the loss in revenue to the government. Sinceindividual taxpayers account for over half of the government'srevenue each year, making health savings accounts a pre-taxdeduction, and then also making the withdrawal of such moniestax free if used for health insurance or medical expense, wouldvirtually eliminate any benefit to the government for revenuetax.Is a program such as this beneficial? Yes, it would tremendouslybenefit the taxpaying public; but will it ever pass through aCongress concerned with revenue increases each year? Probablynot.