Medicare Medical Savings Account plans are a type of Medicare Advantage plan offered by private insurance companies that work with Medicare. They are similar to Health Savings Accounts (HSAs) offered outside of Medicare. With a Medicare MSA plan, you pay no monthly premium, but you will pay your monthly Part B premium. You can only join an MSA Plan if there’s one available in your area.
Call 1-800-MEDICARE or use Medicare’s Plan Finder to see the plans that are available to you. Here are some guidelines on Medicare MSAs.
What are Medicare MSAs?
Medicare MSA plans are both a health plan and a health savings account. Here are the two parts of Medicare MSAs:
- A high deductible health plan that will only start to cover your costs once you meet the high annual deductible. The deductible will be different for each plan.
- A Medical Savings Account into which your plan deposits money tax-free. You can use this account to pay for any costs that come up before you’ve met your deductible.
Things to note about Medicare MSA plans
- You can use the money in your MSA account to pay for any kind of health care costs. If you use the money in the account to pay for Medicare Part A and B covered services, it will count toward your plan’s annual deductible.
- If you have used all the money in your account and still have not met your deductible, you will have to pay out-of-pocket for Medicare-covered services until you meet the deductible.
- Money in the account will roll over from year to year. There’s no limit to how much you can accumulate in your account.
- You will need to get a separate Part D prescription drug plan, as this particular Medicare Advantage plan does not include Part D
- Each time you use funds in your MSA account, you’ll need to fill out a form for your tax return that lets the federal government know what kind of healthcare expense you used it for.
- You can name a beneficiary for your MSA account who will receive the funds if you pass away.
- You are NOT eligible for a Medicare MSA plan if: one is not available in your area, you are on Medicaid, you get health benefits from the Department of Defense or Veterans Affairs, you have ESRD (kidney failure), or you are enrolled in a federal health benefits program.
Who are MSAs for?
Anyone with Medicare Parts A and B who is healthy, who wants a low monthly premium, and who likes being able to put aside tax-free money for health purposes. For those who have the financial resources to pay out a lot of costs before their deductible is met, MSA plans might be a smart long-term savings strategy.
6 Questions to ask when considering a Medicare MSA plan
Here are 6 questions to ask when choosing a Medicare Medical Savings Account:
- How much money will be deposited into my account each year?
- What is the plan’s deductible?
- How are services counted against the deductible, and is there a limit on the charges that will count toward the deductible?
- After I meet my plan’s annual deductible, what am I responsible for paying?
- Is dental, vision, or long-term care offered?
- Is there coverage of preventive services before meeting the deductible?
MSA Plans can be helpful in accumulating health savings if you are healthy and don’t have a lot of medical costs. Carefully read the plan’s information before deciding on an MSA plan to make sure it’s right for you.