AMA Offers Members Opportunity To Open Medical Savings Accounts.

Time is running short to open medical savings accounts, and the American Medical Association has developed a plan to make the insurance product available to its members before it is too late.

AMA Insurance Agency Inc., which markets and administers insurance plans for members of the Chicago-based organization, has agreements with MSAver Resources LLC and Merrill Lynch & Co. to make MSAs available to self-employed physicians and group practices with 50 or fewer employees. AMA Insurance Agency is a wholly owned subsidiary of the AMA.

"Physicians and group practices voiced the need for innovative ways to save on health insurance premiums and enhance financial security," said Peter F. Headley, president and chief executive officer, AMA Insurance Agency. "With this program, they can accumulate savings through reduced taxes and insurance premiums and tax-deferred interest earnings."

An MSA is a tax-deductible custodial account established to pay medical expenses in conjunction with a high-deductible health insurance plan. It provides the tax advantages of an individual retirement account and the medical expense funding options of a flexible spending account. For the AMA plan, Merrill Lynch will manage the custodial accounts, while MSAver Resources offers qualified health plans.

Congress authorized the creation of MSAs with federal tax advantages in 1996. To assuage critics, however, it allowed for only a four-year pilot program--which ends this year--and limited eligibility to employees of small companies or the self-employed.