The Gaps Left By Private Health Insurance Dissertation

The Gaps Left By Private Health Insurance - Dissertation Example Medical savings account evolved first in Singapore during 1984 as an alternative method of prepayment which is meant to address cost escalation caused by moral hazards (Mossialos and Dixon, 2002, p. 121). Medical Savings Account is a trust or custodial account for which a bank or an insurance company works as a trustee for the benefits of the individual or family (Prescott, 1998, p. 27). Medical savings accounts are savings accounts for individuals by which people are required to deposit money or are encouraged to deposit money. The money collected by medical savings accounts should be utilized solely for personal medical expenses (Mossialos and Dixon, 2002, p. 5). Medical savings accounts are considered to be tax-deferred because money contributed to medical savings accounts or money earned from unused balances are exempted from employee’s personal tax and these allow customers to save money for medical expenses. Either employer or employee keeps a portion of that part of the money which is spent on health insurance to the Medical savings account and the other portion is used for obtaining a catastrophic policy to cover medical expenses. Health Savings Account, a synonym for Medical savings account was created on December 2003 by a Medicare Bill signed by George W. Bush. It functions as a part of a high deductible health plan in America. It can be best viewed as Medical IRA because, Health savings account combines a health insurance plan with a tax-free saving account (Sedhom, 2008, p. 1) The medical savings account is based on the principle of self-reliance, because citizens are required to keep a portion of their income for saving purpose every month mainly for meeting their health care costs (Mossialos and Dixon, 2002, p. 121).