A pilot test of medical savings accounts, a potentially lucrative new product for banks, will be conducted during the next four years.

The accounts are part of health care legislation approved by Congress on Aug. 2; President Clinton is expected to sign the bill into law soon.

"Banks are probably missing the boat if they don't get up to pace on MSAs very quickly," warned Kevin Kearns, president of the U.S. Business and Industrial Council, which lobbied Congress to exempt MSA contributions from federal taxes. "We want to attract banks to this issue, but very few are interested at this point."

Contributions to MSAs, which are designed to function similarly to Individual Retirement Accounts, would be exempt from income tax. Withdrawals could be made tax- and penalty-free to pay medical expenses. After age 65, owners could withdraw funds for any purpose.

People who open MSAs could add to their accounts each year to cover routine medical expenses. They also could buy relatively inexpensive "catastrophic" insurance policies with high deductibles, to cover serious illnesses.

Many insurance companies want to offer both the insurance policies and manage the accounts, according to Mr. Kearns. But he said some insurers would enter partnerships with banks, brokerages, and other financial institutions to handle money management.

The pilot program, setting up 750,000 MSAs, is part of a law allowing workers to keep the same health coverage when they move to new jobs and restricting insurers from excluding new clients because of pre-existing conditions.

Seventeen states also exempt MSA contributions from state income taxes.

Mr. Kearns said he expects the four-year test to succeed and lawmakers to make the accounts available to all Americans. By then, he said, insurance companies will have established MSA businesses, and banks may have a tough time breaking in against established brands.

"I don't think banks fully realize the potential for money management offered by MSAs," he said. "By year five or seven, very significant sums of money will be in these accounts."

Banks could earn management fees, he said, and the accounts could be a source of stable deposits, as IRAs are.

Tax-free contributions to MSAs are capped at $2,250 for individuals and $3,700 for families, but customers could make additional deposits.

"There is potential for younger workers to have $200,000 to $400,000 in these accounts as they approach their 60s," he said.

Jack Strayer, lobbyist for the Council for Affordable Health Insurance, said he approached individual banks and the American Bankers Association for help in pushing the legislation through Congress but aroused little interest.

Only Chase Manhattan Corp. offered to help. But even Chase lost interest after Sen. Ted Kennedy of Massachusetts and other Democrats launched a high-profile effort to eliminate them from the health insurance bill.

"I was asked to take a look at this as a potential product way back in March," said Eugene Swanzey, a Chase Manhattan lobbyist. "Then it got tied up in the fight over the whole health care bill, and I didn't have time to spend on it," he said.

Mr. Swanzey said Chase has no plan to introduce an MSA product.

Donna Fisher, ABA director of tax and accounting policy, said banks are wary about having to determine whether a customer's withdrawal would be used to pay health care expenses.

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