Medicare Savings Account Plans
Medicare MSA plans combine a high-deductible Medicare Advantage plan with a medical savings account. First Choice Consulting, LLC helps you understand how they work and whether they fit your healthcare and financial needs.
What Is a Medicare Savings Account Plan?
A Medicare Medical Savings Account (MSA) plan is a type of Medicare Advantage plan with two parts: a high-deductible health plan and a medical savings account.
The plan deposits money into your MSA, which you can use for healthcare expenses. The high-deductible health plan begins paying for Medicare-covered services after you meet the plan's annual deductible.
Unlike a traditional Health Savings Account (HSA), you cannot make your own contributions to a Medicare MSA.
Because an MSA works differently from many other Medicare plans, understanding the account, deductible, and your responsibility for healthcare expenses is important before choosing this type of coverage.
How Does a Medicare MSA Work?
Understanding how the account and deductible work together can help you determine what an MSA may mean for your healthcare spending.
The Plan Funds Your Account
The plan deposits a set amount into your Medicare MSA. The amount varies by plan and can change from year to year.
You can use the account funds for qualified medical expenses, and how you use those funds can affect their tax treatment.
You Have a High Deductible
You are generally responsible for Medicare-covered healthcare expenses until you meet the plan's annual deductible.
The money deposited into your MSA can help pay eligible expenses, but the deposit may be less than the deductible. This means you could be responsible for additional costs before the plan begins paying for Medicare-covered services.
Not Every Expense Works the Same Way
Qualified medical expenses may be paid from the account on a tax-advantaged basis under applicable rules. However, only certain Medicare-covered services count toward the plan deductible.
Understanding the difference between an eligible account expense and an expense that counts toward your deductible is an important part of using an MSA.
What Should You Consider Before Choosing an MSA?
Your Comfort With a High Deductible
Consider how you would manage healthcare expenses if your costs exceed the amount deposited into the account before you reach the deductible.
Managing Healthcare Spending
An MSA gives you greater responsibility for managing the funds in your account and tracking healthcare expenses. This structure may appeal to people who prefer more direct control over their healthcare spending.
Provider Access
Medicare MSA plans generally do not have provider networks. You can receive Medicare-covered services from providers who accept Medicare and agree to treat you, although what you pay before meeting the deductible can vary.
Prescription Drug Coverage
Medicare MSA plans do not include Medicare Part D prescription drug coverage. If you want prescription coverage, you can generally consider a separate Medicare Part D Prescription Plan.
MSA Plans vs. Other Medicare Advantage Plans
An MSA is a type of Medicare Advantage plan, but it works differently from more familiar HMO or PPO plans.
Rather than primarily using a structure of plan-specific copayments or coinsurance for covered services, an MSA combines a high deductible with money deposited into a medical savings account.
The differences in provider access, cost sharing, and account management make it important to understand the structure before deciding whether an MSA fits your preferences.
Medicare MSA FAQs
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Can I contribute my own money to a Medicare MSA?
No. You cannot deposit your own money into the Medicare MSA. The plan funds the account.
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What happens to money I do not use?
Unused funds can generally remain in the account for future healthcare expenses, subject to the rules that apply to Medicare MSA plans and your coverage.
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Does an MSA include prescription drug coverage?
No. Medicare MSA plans do not include Part D prescription drug coverage. You can generally consider a separate stand-alone Part D plan.
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Is an MSA right for everyone?
No. Healthcare use, financial circumstances, comfort with a high deductible, and preference for managing healthcare expenses should all be considered.
Understand Your Medicare MSA Options
Medicare Savings Account plans work differently from many other Medicare coverage options. Our team can help you understand the account, deductible, healthcare costs, and coverage structure so you can make a more informed decision.