Medicare MSA Plans

A Medicare Medical Savings Account, or MSA, is a type of Medicare Advantage plan administered by a private insurance company. Unlike other Part C plans, a Medicare MSA plan includes a high deductible and a bank account to help pay your health care costs.

Rachel Christian, writer and researcher for RetireGuide
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APA Christian, R. (2022, April 21). Medicare MSA Plans. RetireGuide.com. Retrieved May 19, 2022, from https://www.retireguide.com/medicare/medicare-advantage-plans/msa/

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Chicago Christian, Rachel. "Medicare MSA Plans." RetireGuide.com. Last modified April 21, 2022. https://www.retireguide.com/medicare/medicare-advantage-plans/msa/.

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What Is a Medicare MSA Plan?

A Medicare Medical Savings Account plan shares many similarities with traditional health savings accounts, or HSAs.

Deductibles — or the amount of money you must spend before an insurance company pays any of your health care costs — are high. MSA deductibles can average around $6,000 a year or more.

To help cover out-of-pocket expenses, a MSA establishes a savings account at a bank selected by your plan provider.

Two Parts of Medicare’s MSA Plans
  1. High-Deductible Health Plan: You must meet a high annual deductible before the plan begins covering your health care costs.
  2. Medical Savings Account: You can use money deposited into this account to cover any health care costs before meeting your deductible.

Medicare then gives the plan a certain amount of money each year for your health care, and the insurance company deposits those funds into your MSA.

Like a traditional HSA, savings account withdrawals are not taxed when used to pay for qualified medical expenses.

Unused funds also roll over to the following year.

A key difference between a Medicare MSA and a traditional HSA is you cannot deposit your own money into the savings account.

You receive whatever funds are placed into the MSA plan, and this amount can vary from year to year.

After reaching your deductible, your plan pays all your Medicare-covered services.

Medicare beneficiaries were first able to enroll in MSAs in 2007, as a result of the Medicare Modernization Act of 2003.

Only Offered in Select States

Medicare MSAs are one of the most uncommon types of Medicare Advantage plans.

Of the roughly 22 million Americans enrolled in a Medicare Advantage plan in 2019, only about 5,600 people were enrolled in plans that use a MSA, according to the Kaiser Family Foundation.

In 2019, just four insurers offered MSA plans, and they were available in fewer than 20 states.

Did You Know?
Medical MSA plans aren’t available everywhere. Call 1-800-MEDICARE or your State Health Insurance Assistance Program (SHIP) to see if there’s a Medicare MSA plan in your area.

Coverage Under MSA Plans

Medicare MSA plans cover the same Medicare services that all Medicare Advantage plans must cover.

However, only expenses that are related to Medicare Part A and Part B count toward deductibles.

Some MSA plans may cover other benefits — such as dental, vision and long-term care — at an extra cost.

These additional services do not count toward your plan’s deductible.

MSA plans do not offer Medicare prescription drug coverage. However, you can join a stand-alone Medicare Part D prescription drug plan.

Enrollees do not pay a premium for MSA plans, but you will still be required to pay your monthly Medicare Part B premium.

Did You Know?
You can use funds from your Medicare MSA to cover many health care costs you may encounter before meeting the insurance plan’s high deductible.
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How to Join a Medical Savings Account Plan

If you are interested in joining a Medicare MSA plan, contact the plan provider for enrollment information and details on how to join.

Make sure to ask how much money will be deposited into the savings account each year as well as the plan’s deductible amount before you enroll.

There are two opportunities to sign up for a Medicare MSA plan:
  1. During enrollment for Medicare Part B.
  2. During the Medicare open enrollment period (Oct. 15 to Dec. 7 each year).

If you join a Medicare MSA plan but later change your mind, you can cancel your enrollment by Dec. 15 of the same year. However, you only have until Dec. 7 to join a different health or drug plan.

You can’t enroll in a Medicare MSA plan if you:
  • Are eligible for Medicaid
  • Receive Veterans Affairs’ benefits
  • Receive Federal Employees Health Benefits
  • Are already enrolled in employer or retiree coverage that would pay your MSA deductible
  • Are currently receiving hospice care
Last Modified: April 21, 2022

6 Cited Research Articles

  1. Kaiser Family Foundation. (2019, June 6). Medicare Advantage. Retrieved from https://www.kff.org/medicare/fact-sheet/medicare-advantage/
  2. Mercado, D. (2018, February 20). A tax-free account for Medicare that very few people use. Retrieved from https://www.cnbc.com/2018/02/20/a-tax-free-account-for-medicare-that-very-few-people-use.html
  3. Centers for Medicare & Medicaid Services. (n.d.). Fact Sheet on Medicare Medical Savings Account (MSA) Plans. Retrieved from https://www.cms.gov/Medicare/Health-Plans/MSA/downloads/MSAFactSheet-3-13-08.pdf
  4. Medicare.gov. (n.d.). 10 steps to use a Medicare MSA Plan. Retrieved from https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-medical-savings-account-msa-plans/10-steps-to-use-a-medicare-msa-plan
  5. Medicare.gov. (n.d.). How Medicare MSA Plans work with other coverage. Retrieved from https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/how-medicare-msa-plans-work-with-other-coverage
  6. Medicare.gov. (n.d.). What's a Medicare MSA Plan? Retrieved from https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-medical-savings-account-msa-plans