Mellon Bank Corp. is taking advantage of legislation that lets small companies and self-employed people establish tax-free savings accounts for out-of-pocket or uninsured medical expenses.

Mellon Network Services, a division of the banking company, launched a service linking MasterCard debit cards to its medical savings accounts.

The Health Insurance Portability and Accountability Act of 1996, which covers the administration of such accounts, took effect last week.

Mellon's package allows employees of participating companies to pay health care providers with a MasterMoney card - or check, when a card is not accepted. Acceptance of the Mellon card is limited to the health care industry, and payment is made to the provider within three business days.

Card acceptance services are provided through Mellon's Patient Payment System, an electronic payment service that allows health care providers to accept credit and debit card payments, including those connected to medical savings accounts.

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