Medical savings accounts would be expanded under two bills that advanced in Congress last week.

The Senate, 53-47, adopted health-care legislation that included a provision that would remove the cap on the number of medical savings accounts sold and let more businesses offer them to their employees.

It is unclear how soon the full House may consider the legislation, but the House Ways and Means Committee included a similar provision in the $864 billion tax-cut package it adopted on July 14. The House is expected to approve that bill this week.

Banking industry officials welcomed plans to expand the accounts, known as MSAs.

"MSAs are certainly a product the industry supports along with the changes that are being proposed to improve IRAs and expand participation in education savings accounts," said Mark R. Baran, senior tax counsel for the American Bankers Association.

But he said the changes are attached to very controversial pieces of legislation with dicey prospects.

A 1996 federal law created tax-free medical savings accounts, which are linked to health insurance policies with deductibles as high as $2,300 for individuals. Account holders use pretax dollars to cover medical costs.

But the law created them as a pilot program through 2000. It capped the number of accounts at 750,000 annually and limited them to small employers and the self-employed.

Both the Senate and House bills would make the program permanent, eliminate the cap on the number of accounts, and let employers of any size offer them. Other limits would be eased, too. Among the champions of the MSA is Senate Banking Committee Chairman Phil Gramm.

Financial companies such as Fifth Third Bancorp in Cincinnati, Golden Rule Insurance Co. in Indianapolis, and Mellon Bank Corp. in Pittsburgh have been offering the accounts. But the limits in current law have deterred other companies.

"The majority of banks that have looked at MSAs have decided to hold back and wait to see if it becomes permanent," Mr. Baran said. "Banks would be more likely to promote the product" if the pending legislation passes.

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