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Good Medicine

Medical savings accounts offer tax advantages and more-but you'd better rush to get them.

This story appears in the December 1996 issue of Entrepreneur. Subscribe »

The health insurance market for entrepreneurs will take on a hurly-burly Wild West look come January 1, 1997, when The Health Insurance Portability and Accountability Act takes effect. That's when insurance companies, as well as banks and financial services firms-and who knows who else-will start offering medical savings accounts (MSAs) on a nationwide scale.

MSAs allow individuals with high-deductible health insurance plans to set aside money for out-of-pocket medical expenses and gain advantages on federal taxes. They have existed on the state level for some time: Eighteen states already allow a deduction on state income taxes for MSAs, according to Jack Strayer, director of federal affairs for The Council for Affordable Health Insurance, a trade association.

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