ou left your corporate job to set up your own shop a couple of years ago and spent the first 18 months fretting that you wouldn't be able to pay the bills. The good news is that the money started rolling in. The bad news is that you've been using a big chunk of it to replace the benefits package you left behind.

Recognize yourself in this picture?

Finding - and paying for - benefits, particularly medical insurance, is the dark side of most successful one-person businesses, mine included. Many people "go bare," as they say in the insurance industry, taking their chances with no coverage at all. Others opt for the highest deductible health care policy they can find, reasoning that it will cover them in a catastrophe. If you are among them, you should be looking carefully at the medical savings account -- or MSA -- a new tax-advantaged health insurance program for self-employed individuals and workers at businesses with 50 or fewer employees.

Congress approved MSAs, combined with a high-deductible insurance policy, as a four-year experiment starting on Jan.1 of 1998. Here's how they work: You get a tax deduction for money contributed to the account each year. Then you pay your medical expenses by withdrawing funds from the account. If expenses exceed your insurance policy's deductible amount, the policy kicks in and pays the additional costs. If you spend less than the amount you contributed, the difference stays in the account and earns interest.

"For the self-employed business person, this is the best chance you've had in a long time to take care of yourself," says Lee Tooman, assistant vice president of Golden Rule Insurance Co. in Lawrenceville, Ill.

The government approved the program as an experiment for the first 750,000 taxpayers who sign up. No one is certain how many accounts have been opened.

But Richard Stover, a health care actuary with Buck Consultants in New York, says taxpayers have not been opening them as quickly as expected. "There's no incentive for a broker to sell them," Stover says, "and many people still don't understand how they work."

Also, since this is a test program, there are no guarantees the government will let the program continue in the long term. Since brokers have little incentive to sell them, it's also difficult to find MSAs in every state.

Big businesses have been using flexible spending accounts - or FSAs - for years. But they have not been available to the self-employed. And the new medical savings accounts have a compelling advantage: The money is allowed to roll over and build up in the account if you don't spend it. And rather than lying dormant in low interest-bearing savings accounts, you can invest it in mutual funds, stocks or other investment vehicles that typically offer much higher returns over the long run. Whatever you don't spend can be used to supplement retirement income. In contrast, the flexible spending accounts offered by large employers have a "use-it-or-lose-it" provision. Whatever is not used by the end of the year is lost to you.

The government set some rules for the MSA accounts. There is a range for the deductible on the insurance policies: $1,500 to $2,250 a year for an individual; $3,000 to $4,500 a year for a family. Above that amount, the insurance program might cover 100 percent of expenses. Or it can provide for some type of co-payment by participants, say 20 percent of all covered expenses in excess of the deductible. The government also set limits on total out-of-pocket medical expenses (deductibles plus co-payments) with a maximum of $3,000 for a single person and $5,500 for a family.

The employee - or the employer - can make pre-tax contributions that can total 65 percent of the deductible for an individual, 75 percent for a family. So if you buy a single policy with a deductible of $1,500, you can contribute $975 (65 percent of that amount) to a medical savings account. The money can be used to pay those medical expenses you incur before you reach the deductible as well as other eligible costs like eyeglasses and dental care.

If you spend the entire $975, you have to pay after-tax dollars for medical expenses until you hit the deductible. If you spend less, the money builds up in your account. You roll it over at the end of the year and you can make another contribution next year.

You must pay tax and a 15 percent penalty on money that is withdrawn from your account for any use other than medical expenses before age 65. After age 65, withdrawals for non-medical purposes are still taxable but no penalty applies. An analysis in the June issue of the Journal of Financial Planning concluded that such accounts could be used to accumulate a nice retirement nest egg. A person who puts in about $1,500 a year for 25 years could make almost $1.5 million, assuming a 12 percent annual rate of return.

Of course, few people will sail through 40 years without spending any money on health care.

But these accounts offer a good deal on the health care side of the equation, too. I've often wondered why those of us who are self-employed didn't have the option of using pre-tax money to pay for contact lenses and root canals like our friends who work for corporations. Now we do.