Copyright 1999 The Washington Post
The Washington
Post
View Related Topics
July 13, 1999, Tuesday, Final Edition
SECTION: METRO; Pg. B07; FEDERAL DIARY
LENGTH: 760 words
HEADLINE:
Battle Lines Drawn in Congress on Medical Savings Accounts
BYLINE: Mike Causey
BODY:
Friends and foes of medical savings accounts are set for a Senate
showdown Thursday. That's when the Senate is scheduled to take up legislation
that would open the federal health insurance program to medical savings
accounts.
The federal health insurance program is the largest employer
plan in the United States. Many group plans follow the federal program's lead in
providing or expanding benefits. Politicians of both parties--who along with
their families are covered by the federal program--have often used the program
to push nonfederal plans into expanding coverage. Last month, for example,
President Clinton ordered federal health plans to offer the
same coverage for mental illness and substance
abuse that they do for physical disorders. The change won't take place next
year. And it affects mainly health maintenance organizations (as opposed to
fee-for-service plans that already provide comparable coverage) participating in
the federal program.
Backers of the medical savings accounts for the
federal program say the option would allow many employees and retirees--those
who are healthy and seldom use their health insurance--to "bank" money in an
account to be used for rainy-day medical emergencies. Having the option, they
say, would let individuals and families enroll in more basic, less costly
insurance plans while maintaining a cash reserve that they could use if they
needed it. Depending on how the medical savings accounts program is set up, it
could provide a tax break.
Generally speaking, congressional Republicans
support the idea.
Opponents believe medical savings accounts would lure
many workers and retirees--especially those with low incomes--into low-premium
plans that provide only bare-bones coverage. Those employees and retirees would
be liable for a much larger share of medical bills if they or their families had
a bad medical year.
Generally speaking, congressional Democrats, most
federal employee unions and the National Association of Retired Federal
Employees oppose the introduction of medical savings accounts into the federal
health program.
Republicans are as eager to get medical savings accounts
into the federal health program--which covers more than 9 million people,
including nearly half the residents of the Washington area--as Democrats are
determined to block their introduction.
Action is expected on Thursday,
when the Senate is scheduled to take up the GOP version of a proposed "Patient's
Bill of Rights."
'Windfall,' 'Offset' Laws Senate and House bills that
would modify the effect of the "windfall" and "offset" laws on the Social
Security benefits of federal retirees continue--however slowly--to pick up
co-sponsors.
The windfall law can reduce--but not eliminate--the Social
Security benefits earned by federal workers. The reduction is based on a complex
formula, but generally it applies to individuals who spent part of their
careers, but less than 30 years, paying into Social Security.
The offset
law applies to the spousal Social Security benefit of someone retiring with a
civil service annuity or other retirement benefit not covered by Social
Security. The offset law usually eliminates the spousal Social Security benefit.
Neither the windfall nor the offset has any effect on the earned civil
service benefit of federal retirees.
Proposals in the Senate and House
would modify the effect of the offset and windfall laws by applying reductions
only to combined monthly benefits over certain amounts.
Legislation
watchers believe it is too late in this session for either bill to make it
through the congressional process. But additional pledges of support--in the
form of members signing on as co-sponsors--improve the chances of passage next
year.
G-Fund's July Rate Money invested in the G-fund (special Treasury
securities) of the federal thrift savings plan will be invested at 6.125 percent
for the month of July. That is the highest rate for the G-fund since December
1997.
The two other funds available to workers in the government's
401(k) plan rise and fall with the markets. The C-fund tracks the Standard &
Poor's 500 stock index; the F-fund tracks a bond index.
Although the
G-fund, with its guaranteed return, remains the "safest" investment for feds in
the thrift savings plan, workers who have invested exclusively in the
higher-risk, higher-reward C-fund have much larger account balances, thanks to
the booming stock market of recent years.
Mike Causey's e-mail address
is causeywashpost.com
Tuesday, July 13, 1999
LOAD-DATE: July 13, 1999 
