Google Answers Logo
View Question
Q: MSA Healthcare options for my small business ( Answered 5 out of 5 stars,   4 Comments )
Subject: MSA Healthcare options for my small business
Category: Business and Money > Small Businesses
Asked by: webhosting-ga
List Price: $10.00
Posted: 14 Jun 2002 14:17 PDT
Expires: 21 Jun 2002 14:17 PDT
Question ID: 26078
Dear Experts, 

My wife and I are the only shareholders of an S-Corp.  We have 4 other
people on staff, insuring at total of 7.  (one of the staff members
wife included).  We operate out of Alpharetta, Georgia.

Our healthcare costs for the business run approx $1500 per month
(Conventry Health Care of GA, PPO type plan).  We have shopped against
many different providers, and this is about the best rate we can get. 
Part of the challenge is that one of the insured has Hepetitus B
(doesn't go away).

I really struggle trying to provide quality healthcare for everyone,
yet keep our costs low.  I have heard a little of "Medical Savings
Accounts" (MSA) for the self employed.  That would allow one to have a
higher deductible, but potentially save money by keeping the
difference in premium in this tax deductable MSA.

My question is:  Would this be an viable option for our business as

What are the pros and cons?   

If viable, what is the best place to go to help us set this up for our
company?  What are our options?

If an MSA is not for us, please help us with an answer that will lower
our costs.

As much details as possilbe, please and thank you!
Subject: Re: MSA Healthcare options for my small business
Answered By: weisstho-ga on 16 Jun 2002 16:01 PDT
Rated:5 out of 5 stars
Dear webhosting,

The MSA concept combines a high-deductible catastrophic health
insurance policy with a tax-preferred savings account for medical
expenses. Consumers (or their employers) deposit pre-tax dollars into
the MSA, which covers first-dollar, out-of-pocket costs, such as
routine visits to dentists. If a family's medical expenses exceed the
catastrophic policy deductible, insurance takes over. Whatever MSA
funds participants do not spend is theirs to keep (and grows

The IRS has a handy publication that explains MSA:

Although written by an insurance company, this site has some nice
explanations, although it relies heavily upon the IRS publication
cited above:

Your company, since it has fewer than 50 employees over the past two
years, is a “small employer” eligible for the Archer Medical Savings

The key ingredient then is the High Deductible Health Plan (“HDHP”)
for which the law requires the following limits on deductibles:

For one-person:  $1,650 minimum annual deductible, $2,500 maximum
annual deductible, and $3,300 maximum annual out-of-pocket expenses.

For a family:  $3,200 minimum annual deductible, $4,950 maximum annual
deductible, and $6,050 maximum annual out-of-pocket expenses.

The employer then can pick up the premiums for the HDHP, and if he/she
chooses, can pick up the contributions to the trust account that is
established for the employees to cover the deductible. These
contributions are not taxable to the employee if paid by the employer;
if paid by the employee they are deductible on the employee’s Form
1040. Caution:  Special rules apply if payments are made to the trust
by both the employer and the employee. See the IRS brochure.

Rutgers State University has a nifty web page addressing the basics:

So, the basics of the Trust seem straight-forward. Trust is formed,
employer contributes money to the trust sufficient to cover all or
part of the amount not insured by the High Deductible Health Plan,
employer picks up the HDHP premium, and all is well. Or is it?

The State of Hawaii has identified problems with HDHP providers not
paying money out, as required by the policy contract: Clearly, only the most
reputable insurers should be used.  References from other employers in
your state (Georgia) that use a HDHP provider are a must. Also, the
Consumers Union, publisher of Consumers Reports, seems to be no fan of
these Medical Savings Accounts, though their concerns seem more from a
public policy perspective: . Indeed,
there has been much debate over this idea. The Republicans have opined
that it is a panacea, while the Democrats have opposed it. The truth
seems to be in the middle: works for some, not some others, and has
dangers which must be addressed. Pro: ; Con: .

There are, apparently, no protections as to those like your one
employee who have a pre-existing condition. This is an issue that
would have to be discussed with the insurers.

I have not found anyone providing pricing over the net directly.
Apparently inquiry has to be made to the insurers for quotes.

The Georgia Insurance Commissioner has
a brochure on insurance: see page
38-39 about a few tips on buying insurance. You can also call the
Commissioner 404-656-2056 or toll free at 800-656-2298 and inquire
about any advice that they may have or insurers/agents to stay away

Unfortunately there is not sufficient information available in the
public domain that would enable a businessperson to make a decision.
But using the IRS pamphlet and the other general guides, talking to
the State of Georgia Insurance Commissioner (and anyone else: local
Chamber of Commerce, state Chamber, as examples) should prove useful.

I noticed that some of the plan trustees or administrators provide the
employees with a debit card – show up at the doctor and flash the
card. That certainly makes it convenient for the small dollar office
visits / minor medical payments.

How your local hospitals will react to the HDHP policies is a critical
question that you may want to run by your local hospital’s business
office. The last thing you want to do is be laying on a stretcher
while some hospital billing specialist tries to find out if they are
going to get paid for the BIG bill. I would certainly suggest you talk
to the hospital and get their advice.

I hope that this was useful. If I have missed something, please ask
for “clarification” and I will bounce right back.

Best of luck, and congratulations for having the welfare of your
employees at heart. That says a lot in this day and age of spiraling
health care costs.


Search Terms Used:


Request for Answer Clarification by webhosting-ga on 17 Jun 2002 10:03 PDT
Thank you for the excellent start of resources, I sent a note for
further info to the Georgia Insurance Commissioner.

I also found that on the MSA's on the IRS publication 969 that it is
"a pilot project authorized by congress and scheduled to end

What exactly does that means for us?

Also, were you not able to find a list of insurers to contact in GA? 

Thank you.

Clarification of Answer by weisstho-ga on 17 Jun 2002 13:51 PDT
It is true, as you observed, that the legislation supporting MSA's
sunsets on December 31, 2002, this year. Senator Grassley (R-Iowa)
introduced last year (June 2001) Senate Bill 1067 to reauthorize
MSA's.  The Bill Following system at *THOMAS* shows the Bill lodged in
the Finance Committee, where it has been for some time.

I called Senator Grassley's office in Washington, D.C. and was
connected to the Senate Finance Committee where I spoke with a very
pleasant person (Diane) who indicated that the Bill has been stalled
since July or August of 2001. MSA's are generally a child of the
Republicans and the Democrats are opposed to the concept. (There is
some bi-partisan support, for example Sen. Torricelli (D-NJ) supports
MSA's - but there isn't enough Democratic support to dislodge the

It was Diane's **opinion** that any MSA's that would be formed this
year would be grandfathered in and permitted to exist in the future.
This, of course, begs the question as to the availability of the HDHP
policies needed to anchor the MSA's.

I believe, but haven't been able to confirm, that the HDHP policies
may be available in other contexts besides MSA's - - if this is true
then the availability of HDHP's should be more certain.

Certainly the political future of MSA's is in serious doubt, at least
for the foreseeable future and through the elections of this fall. It
would seem unlikely, not impossible but unlikely, that there will be
no further action this year.


As to companies, I am reluctant to suggest a specific company since I
certainly don't want to put you in touch with a loser that takes your
money and forgets your coverage.

However, I rely heavily on a company called A.M. Best which is a
rating service specializing in rating insurance companies. They have a
great Web site:

You can get a list of all rated insurance companies on their search
page ("locate a company and its report" and then specify Georgia,
health insurance, all companies):

Once you get this list, click on a company, see its *Best* Report, and
there will be a click-through site to get to that company's home page.
 For example: Blue Cross Blue Shield of Georgia:

Remember, of course, that an insurance company will provide the High
Deductible Health Plan.  A financial services company would actually
administer the trust account. It seems that most financial service
entities offer the MSA Trust service.

I hope this was helpful. Again, good work on looking out for your

webhosting-ga rated this answer:5 out of 5 stars

Subject: Re: MSA Healthcare options for my small business
From: justthefaqs-ga on 14 Jun 2002 14:44 PDT
Golden Rule Life Insurance out of Iowa, I believe, helped develop a
lot of the MSA concept according to what I have heard.
Look at
Subject: Re: MSA Healthcare options for my small business
From: chromedome-ga on 14 Jun 2002 17:00 PDT
Hello, webhosting.

I am a former insurance salesman here in Canada.  I have no knowledge
of the American market (very different from ours) and so will not
attempt to answer the question, but I will offer this, with regard to
your costs.

In many cases, it is possible to obtain group coverage through
membership in one or another association.  Here in my city, for
example, Chamber of Commerce member businesses are eligible for
reduced-rate health insurance.  If you have not already done so, you
may wish to inquire at your local chamber.  Likewise, if your business
is eligible to join a professional association (most industries have
them) you may be able to reduce your costs through this avenue.

You may wish to read this previous question on Google Answers, which
contains information similar to what you've requested:

Good luck!
Subject: Re: MSA Healthcare options for my small business
From: gastrodoctor-ga on 14 Jun 2002 17:12 PDT
Dear Webhosting,
The MSA is probably your best bet. I have had one for several years
for my family and now have a tidy sum earning a nice return, from
which I can pay directly for health care services with pre-tax money
(by the way, I haven't tapped this fund yet)and rely on the
high-deductable catastrophic insurance (relatively cheap)for the
possible train-wreck in my future. The savings are mine to keep if
unused, and become similar to an IRA, becoming available in
retirement. Since it's my own money, I am careful how it is spent,
unlike most insurance, where there are no incentives to be frugal. It
is not clear how this scheme would work for those with pre-existing
Subject: Re: MSA Healthcare options for my small business
From: henry123-ga on 17 Aug 2002 14:31 PDT
Although it is not an MSA, the very best solution for small (or for
that matter large) business today is to combine the access to a major
network, such as PHCS, with an adequate indemnity policy, such as that
provided for by Pan American Life. When your per diem rate is 1,000
per day through the PPO allowable rate, and you received 1,000 per day
(max 500 days) from your indemnity policy, your remaining costs are
minimal. They also pay 50.00 per doctor visit (any doctor) and 500.00
per accident, as well as a surgical schedule, wellness allowance and
5.00 generic copay for drugs. It even includes a small life insurance
policy. This is available for a group of 2+ as a guaranteed issue in
Georgia and many other states, no age load 18-64, no gender bias.
Essentially this becomes a no deductible, no additional 'out of
pocket' expense, answer to, what has been a never ending nightmare of
skyrocketing costs and ever increasing deductibles. Pan American is a
AAA rated company which keeps a low profile and has been in business
since 1911.
This plan also includes a dental component, vision savings, and Long
Term Healthcare savings

With everything mentioned, including the PHCS access, this plan is
only a little over 200.00 for a family of 3 or more.

This policy was only made available within the last 2 weeks and the
Brokerage company that knows most about it is the Mirimar Group who
are in 46 states 1-888-264-7262.

Important Disclaimer: Answers and comments provided on Google Answers are general information, and are not intended to substitute for informed professional medical, psychiatric, psychological, tax, legal, investment, accounting, or other professional advice. Google does not endorse, and expressly disclaims liability for any product, manufacturer, distributor, service or service provider mentioned or any opinion expressed in answers or comments. Please read carefully the Google Answers Terms of Service.

If you feel that you have found inappropriate content, please let us know by emailing us at with the question ID listed above. Thank you.
Search Google Answers for
Google Answers  

Google Home - Answers FAQ - Terms of Service - Privacy Policy