Bush Promotes Expanded MSAs, FSAs

President Bush, on February 11, outlined his administration's health care agenda, which includes proposals to expand both Medical Savings Accounts (MSAs) and Flexible Savings Accounts (FSAs) and to provide refundable health tax credits to low- and middle-income individuals and families who do not have employer-provided insurance. The president also supports legislation to provide temporary health tax credits for workers who have lost their jobs during the recession. The health tax credit, estimated to cost $15 billion, would be available through 2003 and would apply to 60% of the annual cost of continuing health coverage for workers eligible for unemployment insurance.

In remarks at the Medical College of Wisconsin in Milwaukee, Bush asserted that the role of the federal government is "not to centralize or to control the delivery" of medical services but to "reform the system to make it more individualized."

On expanding MSAs, Bush proposes to lower the deductible requirements to levels that are comparable to private health insurance plans, according to details released by the White House. Under the proposal, employees who have a health plan with a significant deductible of up to $1,000 for individuals and $2,000 for all other cases could deposit funds into the MSA, tax free, up to the insurance policy's deductible. The administration's MSA proposal also would extend to preventive care coverage. The proposal would cost $5.7 billion over 10 years.

On FSA expansion, the administration would allow employees to roll over up to $500 in unspent health care contributions to an FSA to use the following year or to contribute to their 401(k) plan. The FSA proposal would cost $8 billion over ten years.

The proposed refundable health tax credit would total up to $1,000 per individual and $3,000 per family to help to pay insurance premiums and is estimated to cost $89 billion over ten years. The credit phases out at income levels of $60,000 for families and $30,000 for individuals. The health credit could also be used in privately-sponsored health insurance purchasing groups.

In addition, to help caregivers of parents or children who need long-term assistance, the administration proposes an additional tax exemption. The proposed personal exemption would be $3,000 in 2002 and cost $3.6 billion over ten years.


This article is provided courtesy of CCH, Inc.


You may like these other stories...

Smaller companies slow to adopt new rules for internal controlsSmaller companies are not keeping up with larger rivals in adopting new internal controls as the Dec. 15 deadline approaches, John Kester of the Wall Street...
Ryan to chair tax panel, a possible 2016 platformHouse Republican leaders chose Rep. Paul Ryan (R-WI) on Tuesday to head the powerful House Ways and Means Committee for the next two years, giving him a high-profile platform...
For the most part, when you donate monetary gifts to charity, whether it’s in cash, by check or credit card charge, you can deduct the full amount on your tax return as long as you meet IRS substantiation requirements...

Already a member? log in here.

Editor's Choice

Upcoming CPE Webinars

Nov 24This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Dec 3The materials discuss the concepts and principles in the AICPA’s new special purpose framework.
Dec 9A key component to improving your firm’s workflow efficiency while enhancing your profitability at the same time is how you leverage emerging technologies.
Dec 9Kristen Rampe will cover how to diffuse the tension in challenging situations in this one-hour webinar.