Medicare Medical Savings Account (MSA) plans are private companies that the federal government pays to administer Medicare benefits. Like all Medicare Advantage Plans, MSA plans must provide you with the same benefits, rights, and protections as Original Medicare Original Medicare, also known as Traditional Medicare, is the fee-for-service health insurance program offered through the federal government, which pays providers directly for the services you receive. Almost all doctors and hospitals in the U.S. accept Original Medicare. , but they may do so with different rules, restrictions, and costs. Some MSAs offer additional benefits, such as vision and hearing care. Unlike other Medicare Advantage Plans, MSA plans include both a high deductible The deductible is the amount you must pay for health care expenses before your health insurance begins to pay. Deductible amounts can change every year. health plan (HDHP) and a bank account to help pay your medical costs.
High deductible health plan
HDHPs have large deductibles that you must meet before receiving coverage. This means if you have an HDHP, you will pay in full for most health care services until you reach your deductible for the year. Afterwards, the HDHP covers all your costs for the remainder of the year.
Bank account
MSA plans also come with a bank account where your plan deposits funds once each year for your medical expenses, which you can use to pay for your deductible.
- Your plan chooses the bank account and the amount it contributes. Generally the plan’s contribution is lower than the full deductible.
- Funds contributed to an MSA are not taxed, as long as they are used to pay for qualified medical expenses.
- You cannot deposit more money into the account. Once you have used the money in the account, you have to pay out of pocket until you reach your deductible.
- Remember, you will typically have high out-of-pocket costs for your care until you reach your deductible. After reaching your deductible, your MSA plan covers 100% of the cost for Medicare-covered services.
Enrolling in an MSA plan
You must have both Parts A and B to join an HDHP and an MSA, and generally you will continue paying your Medicare Part B Part B, also known as medical insurance, is the part of Medicare that covers most medically necessary doctors’ services, preventive care, hospital outpatient care, durable medical equipment (DME), laboratory tests, x-rays, mental health services, and some home health care and ambulance services. . Some MSA plans charge an additional premium, on top of your Part B premium. MSA plans cannot offer Part D Part D, also known as the Medicare prescription drug benefit, is the part of Medicare that provides prescription drug coverage. Part D is offered through private companies either as a stand-alone plan, for those enrolled in Original Medicare, or as a set of benefits included with a Medicare Advantage Plan. coverage. To receive coverage for your Prescription A prescription is an order for a health care service or drug written by a qualified health care professional. drugs, you must join a stand-alone Part D plan.
You can only enroll in an MSA plan:
- When you first sign up for Part B
- Or, during the Fall Open Enrollment Period
You cannot:
- Join an MSA if you have any other type of health insurance, including Medicaid Medicaid is a federal and state program that provides health coverage for certain people with limited income and assets. , Veterans Affairs benefits, Federal Employee Health Benefits, or many kinds of employer or retiree insurance Retiree insurance is health insurance provided by employers to former employees who have retired. Retiree insurance almost always pays secondary to Medicare. See also: Secondary Insurance.
- Have any employer or retiree coverage that would pay during your MSA deductible. Speak to your human resources department or benefits manager for more information.
MSA plans may have provider networks. You may pay less for your care when using in-network In-network means part of a private health plan’s network of providers. If you use doctors, hospitals, pharmacies, home health agencies, skilled nursing facilities, and durable medical equipment suppliers that are in your Medicare Advantage Plan or Part D plan’s network, you will generally pay less than if you go to out-of-network providers. providers or facilities. All MSA plans also must cover out-of-network Out-of-network means not part of a private health plan’s network of health care providers. If you use doctors, hospitals, or pharmacies that are not in your Medicare Advantage Plan or Part D plan’s network, you will likely have to pay the full cost out of pocket for the services you received. care, but you may pay a higher cost.
Medicare MSA plans are not available everywhere. Call 1-800-MEDICARE (1-800-633-4227) or your State Health Insurance Assistance Program (SHIP) to find out if there is an MSA plan available in your area. To enroll in an MSA plan, call Medicare or the plan directly. Be sure to make an informed decision by contacting a plan representative to ask questions before enrolling.