Home Federal Savings Bank of Napa, Idaho, is entering the health insurance business through a new debit card alliance.

The $200 million-asset thrift is offering a Visa check card to people who have medical savings account programs through their employers.

The program is being marketed to the self-employed and to companies with fewer than 50 employees by American Health Value of Boise, Idaho, which specializes in administering such accounts.

Medical savings accounts are similar to flexible spending accounts, a corporate benefit that lets employees set aside money tax-free for paying uninsured or out-of-pocket medical expenses.

The concept will be broadened in 1997 through MSAs as authorized by Congress' 1996 Kassebaum-Kennedy legislation.

On Thursday, Mellon Bank introduced a MasterMoney card, MasterCard's off-line-debit card, to access medical savings accounts.

"We believe this is a niche that makes us unique and puts us at the forefront of what will be happening in the world of medical costs," said Daniel L. Stevens, president and chief executive officer of Home Federal.

The thrift sees its exclusive partnership as an opportunity to increase its deposit base, earn fees from merchants, and cross-sell other financial products to the cardholders.

American Health Value is providing the customer service and entering into contracts with insurance providers such as Star Marketing and Administration Inc., which offers high-deductible medical insurance. Starmark is a subsidiary of Trustmark, a mutual insurance company.

Such insurance typically requires a deductible of $1,500 or more. Deductibles can be paid from the medical savings account.

Unlike flexible spending accounts, MSAs allow employees to carry over money not spent in a given year, and the accounts earn interest.

Home Federal Savings will let customers draw down their funds with both checks and debit cards.

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