Medicare MSA Plans

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.

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.

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.

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.

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.

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.