Medical savings accounts have been legal in Montana since 1996. The money put into an account up to $3,000 per taxpayer decreases your state tax liability. If you withdraw from the account to pay for eligible medical care expenses that are not covered by your insurance, that money remains deductible. Eligible expenses include things like medical insurance premiums, dental care including orthdontists, eyeglasses, or prescription drugs. Not covered would be medical-related bills covered by any supplemental, primary or self-insured plan.

A medical savings account can help you even if you've already paid the bill, but it was in this tax year, says Goetting. Though it may be more difficult to scrape the money together to put into an account if you've paid a lot of medical bills, once the money was in such an account you could reimburse yourself for eligible medical bills you have already paid.

For instance, Suzi didn't know about the new law and had already paid over $2,300 in dental bills that were not covered by her insurance. But she can still pen an account and pay herself the exact amount of the bills. She'll have to document the amount of withdrawals that went for eligible medical care expenses, but the sums will reduce her state income tax bill for the year.

Though the program reduces your state income tax, it does not reduce federal income tax liability.

There may also be a fee for the account's administration. For example, one financial institution Goetting contacted charges a $1 fee per withdrawal for each one in excess of six per month. Another institution does not charge a service fee if the account holder maintains a $200 minimum balance.