Monday, August 20, 2007

Medical Savings Account

When I wake up very early in the morning, I sometimes compensate for the lack of dreams by thinking up some idea that may or may not follow the rules of rational thought. Today I feel like I had a "Eureka" moment, although I think someone may have already thought of this first. I promise that this would be short.

Why do we always have to look to the government to provide for our medical needs? For those who are in the middle class and can easily afford it, why not set up a Medical Savings Account?

I know that the current interest rate is 1% per annum, a pittance compared to loan interest rates. That is another story. A more potent motivator to save would be an interest rate of 4%, tax free. But there's a catch.

You can save a fixed amount, say P500, every month. Interest of 4% per annum would be credited, tax free. No withdrawals would be allowed except for valid medical claims, where the bank will issue a check for partial or full payment of a medical bill. The check is to be addressed directly to the medical institution concerned.

The best part is you can get your money, with tax-free interest, after the 10th year of contribution, if so desired. If you get your money before that, then the accrued interest would be re-computed to only 1% per annum and the excess interest charged back to you.

What do you think? A great vehicle for saving, if I may say so myself. Now, I should get back to bed - it's still 3:30 and the sun hasn't come up yet.

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