Medical Savings Accounts (MSA) may be the most attractive option in health care insurance available to small employers. An MSA used in conjunction with a 'catastrophic' health policy gives the insured greater control over health spending, and your money back, eventually, if you stay healthy! Program Description Medical Savings Accounts are available to those who are self-employed, or to companies with 50 or fewer full time employees. The tax advantages accrue only when the MSA is companioned by a catastrophic health policy. Either the employer or the employee may deposit funds in the MSA, on a tax deductible basis, but not both in the same calendar year. Interest earned in the MSA is tax-free, and withdrawals for IRS-approved medical expenses are not taxed either. IRS-approved medical expenses include many services not covered by most health insurance policies, such as eyeglasses and dental care. The actual account which holds the funds for an employee's MSA may be as simple as a special checking account, as long as it is isolated for the purpose and identified as such. It may be established at any financial institution that complies with the reporting requirements of the law, whether it be a bank, savings and loan, stock brokerage, credit union, or even the company which provides the catastrophic health policy. Funds may be withdrawn from an MSA for non-medical purposes, but a 15% penalty applies, and they then become taxed as income. For those over 65, withdrawals are not subject to the penalty, but are subject to tax. The companion health policy must have an annual deductible of at least $1500 for individuals and $3000 for families, with a maximum of $2250 for individuals and $4500 for families. Out of pocket limits (combination of deductible and co-insurance) may not exceed $3000 per year for individuals, $5500 for families. You can contribute up to 75% of your deductible into the MSA each year ($1462.50 for singles, $3375 for families). Since the MSA is only available in conjunction with a high-deductible medical policy, the Request for Quotation for Group Medical should be used in seeking more information.