Mellon to Offer Medical Savings Accounts To Members of American Dental

Mellon Bank Corp. unveiled last week an agreement to market its administration of medical savings accounts to the American Dental Association's 140,000 members.

The accounts, offered under a pilot program set up by the Internal Revenue Service in January, allow self-employed workers and businesses with fewer than 50 employees to save money for doctors' bills, prescriptions, surgery, etc.

"Because most ADA members are self-employed or work in practices with 50 or fewer employees, MSAs represent a health care coverage alternative that is particularly well-suited to their needs," said James H. Sweeney, chief executive officer of ADA Financial Services Co. in a prepared statement.

The accounts are intended to be compatible with high deductible health care insurance policies. Money in the accounts is typically invested in mutual funds, and investment return is tax-deferred.

Mellon is adding the medical savings accounts to a program it set up with the dentists association in January 1995, dubbed the ADA 1 Plan, which helps dentists build their businesses by making loans for equipment or education.

The deal is Mellon's first effort to align with a national affinity group to market medical savings accounts, according to a bank spokesman. The spokesman acknowledged the bank has other similar affiliations with regional affinity groups, but declined to disclose them.

Wells Fargo & Co. began a similar program in June with the National Federation of Independent Businesses, whose 600,000 members constitute the country's largest small business trade group.

Other administrators of medical savings accounts include Fifth Third Bancorp, Merrill Lynch & Co., and State Street Corp.

Mellon has been offering the accounts since Jan. 1 by arranging to administer accounts marketed by insurance companies, including three members of the Blue Cross Blue Shield Association as well as American National Insurance, American Republic Insurance, and Golden Rule Insurance.

Under the alliance with dentists association, the bank will refer members' opening accounts to those same insurance companies.

Medical account holders at Mellon use MasterMoney, an ATM card from MasterCard's off-line debit program, to pay for health care services and purchases.

The money in the account can be placed in interest-bearing checking and invested in Mellon's proprietary mutual funds and other families offered through its Dreyfus Corp. subsidiary.

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