What are Medicare MSA Plans (Medicare Medical Savings Accounts)

Reviewed and Updated by Anastasia Iliou,

A Medicare Medical Savings Account, or MSA, is one of six different types of Medicare Advantage plans. Medicare Advantage plans are private Medicare plans that cover everything Original Medicare covers but can add in additional benefits like dental, vision, hearing, physical fitness, non-emergency medical transportation, and more. The MSA plan type creates a non-taxable financial account for your healthcare costs.

How do Medicare MSA Plans Work?

If you’ve previously had a healthcare plan through an employer or the individual marketplace, you may have heard of an HSA, or Health Savings Account. Medicare MSA plans are similar to HSA plans. The plan you choose will include a bank account with a set amount of money in it. You can use that money to pay for your healthcare costs. If you use all of the money in your account and need more, don’t worry: once you meet your plan’s deductible (a set limit on what you can spend), you will be fully covered. If you don’t use all of the money in your MSA, it will carry over to the following year. This way, you can continue to build on your account. The money in your MSA is not taxable.

MSAs are also different from other Medicare Advantage plan types, like HMO (Health Maintenance Organizations) and PPOs (Preferred Provider Organization) in that you do not have to select a primary physician. Depending on your plan, you may still have a network, but it wouldn’t be nearly as strict as another plan model.

The Cost of an MSA

You will not have to pay a monthly premium specifically for your Medical Savings Account, but you will have to pay a premium if your plan includes additional Medicare Advantage benefits. Regardless, you will still pay your Part B premium.

Your plan determines the amount of money that goes into your account each year – this depends on the plan you choose. Once that is settled, you cannot go in and deposit additional monies. You will have a card that functions somewhat like a debit card for your medical expenses. When you use the card, the money will be taken from your account and given to the doctor. You will receive a statement each month that tells you what money has been taken out of your account and for what purpose. You can ONLY use this card for medical expenses. If you use the card for non-medical expenses, you will then have to pay a 50% tax penalty.

What do Medicare Advantage MSA Plans Cover?

Medicare MSA plans and other types of Medicare Advantage plans start by covering everything that Medicare Part A and Medicare Part B cover. Then, individual Medicare Advantage MSA plans often add benefits like dental, vision, long-term care, additional home health, and more. MSAs are different from other types of Medicare Advantage plans in that they typically do not cover prescription drugs.

In 2017, the Kaiser Family Foundation released data that only 3% of people enrolled in a Medicare Advantage plan selected an MSA option. The MSA plan type is typically better for those who are healthy, not taking expensive prescriptions, and more worried about cost savings than additional benefits.

Medicare Medical Savings Account Eligibility

Most people who are eligible for Medicare can enroll in a Medicare Advantage MSA plan. There are a few exceptions:

  • Those who have another form of health insurance coverage (employer or group coverage, individual health plan, TRICARE, etc.)
  • Anyone eligible for Medicaid
  • Those with ESRD (End-Stage Renal Disease) and those who are in hospice
  • Non-citizens and those who live outside of the United States for more than half of the year.

If you are eligible, you can enroll during your Initial Enrollment Period (when you first become eligible for Medicare), during your Special Enrollment Period if you have one, and during the Annual Enrollment Period each fall.

If you aren’t sure whether or not you can enroll in an MSA, or if you would like to talk to a professional about your various plan options, send us a message now or give us a call at 844-431-1832.

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