State Street Corp. began offering medical savings accounts Tuesday to clients of financial planners and insurance companies that work with its Boston-based money management subsidiary.
Initially, State Street Global Advisors will charge a $75 annual fee for servicing the accounts, which will invest in its SSgA mutual funds. The 17 funds have $11 billion of assets under management.
Under a pilot program set up by the Internal Revenue Service after the passage of the Health Insurance Portability and Accountability Act earlier this year, self-employed people or those working for companies with less than 50 employees can use medical savings accounts to pay for health care.
Account holders can write checks off the accounts to pay doctor's bills and other medical costs. The maximum allowed annual contribution of $3,375 is tax deductible, and investment gains are tax-deferred.
"The only reason why we're doing it is we feel it's unique," said Gus Fish, a principal at State Street Global Advisors.
Other financial institutions offering the account service include Fifth Third Bancorp, Mellon Bank Corp., Merrill Lynch & Co., and Wells Fargo & Co.