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Medical money By JOHN DARLING for the Mail Tribune Medical Savings Accounts — which allow workers to save up to $5,000 tax-free for expenses not covered by insurance — have been around almost 30 years. Now, though, with the mushrooming of health care costs, the accounts are gaining in popularity. "I love it, I really do — and each year I increase it. It's taken out of my check and I know I'm going to use it for prescription drugs and other care," said Barbara Marah, benefits specialist with Southern Oregon University. "I don't get to claim those medical costs on my income tax, of course, because it's already tax-free." Marah is among a growing number of government and corporate employees who look at all their out-of-pocket medical costs — including co-payments, deductibles and even over-the-counter remedies — and realize they'd be a lot better off living with this pre-tax deduction and reaping its benefits. "It covers anything insurance doesn't cover, like if there's a huge co-pay on a $10,000 operation and only 80 percent is covered," said Doug Detling, human resources director for the City of Medford. Advertisement Nationally, about 20 percent of eligible employees put money in such accounts, he added, noting that among Medford city employees ("our folks are pretty savvy") it's more than 70 percent and growing every year. At SOU, the user rate is about 10 percent, said Marah, who notes that the university's plan was introduced just over a year ago. More than three-fourths of Ashland city employees use the plan, said Tina Gray, city human resources director, who deposits $200 a month in her account. "I really like it. I definitely recommend it to employees and I always find a way to use the amount I put in," she says. Money in an employee's account is on an annual "use it or lose it" basis. Most use it — even if they have to "be creative" and go to the drugstore to stock up on over-the-counter supplies such as contact lens solution, Gray added. Unused funds left in a small percentage of accounts revert to the city to pay for the cost of administering the program. The plan comes in two varieties, for oneself and for dependents, with a $100 annual deductible. It's known in the industry as a "cafeteria plan" or a Flexible Savings Account (FSA) and is administered by an insurance company, which holds the funds and, when faxed receipts by employees, disburses the money. SOU's provider, Benefit Help Solutions, shows a list of what's covered — hearing aids, immunizations, alcohol-drug treatment, massage, laser eye surgery, pregnancy test, orthodontics, glasses, counseling and, if prescribed by a doctor, weight loss, exercise and dietary supplements. Not covered, it noted, are vitamins, cosmetic surgery and sundries, such as mouthwash and hair remover. The accounts amount to a federal subsidy on what employees spend on health care, said Detling, because the government does not get taxes on that income — and the city doesn't have to pay Social Security on it. This has saved Medford more than $600,000 in the past five years, he said. Many employees are "afraid they'll lose money," Detling said, if they gamble on having money deducted from their check — and then don't get sick. "That's one of the reasons four out of five eligible workers nationally don't do it." Detling added, "I think it's a great program. We give employees the drill each year and educate them that it's a good choice. I've used it myself for over 20 years and I think I've only lost $60." A similar tax-free vehicle available to City of Medford employees is the Voluntary Employee Beneficiary Association (VEBA) — where they deposit earnings for use at any time, including retirement, for health care or insurance premiums. "The average person needs $150,000 from age 65, for medical costs," Detling noted. "In our society, we don't save enough for medical care (in old age), so this is a good idea." John Darling is a freelance writer living in Ashland. E-mail him at [email protected]. Mail Tribune Home | Local News | Sports | Business | Obituaries | Life | Opinion AP News | Archives | Site Map | Community | Classified Copyright © 1997-2006 Mail Tribune, Inc. All rights reserved. Privacy Policy | Terms & Conditions | Website Feedback online casinos news Home Security Systems California Casinos Men's Clothing Southern Oregon Loans --> GMAT Prep Fundraisers Send Flowers Entertainment Guide --> Casinos Canada Trunks, Footlocker Online Casino Reviews Advertisements Advertisement