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, 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 health plan (HDHP) and a bank account to help pay your medical costs.
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.
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.
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 premium. Some MSA plans charge an additional premium, on top of your Part B premium. MSA plans cannot offer Part D coverage. To receive coverage for your prescription 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
- Join an MSA if you have any other type of health insurance, including Medicaid, Veterans Affairs benefits, Federal Employee Health Benefits, or many kinds of employer or retiree 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 providers or facilities. All MSA plans also must cover out-of-network care, but you may pay a higher cost.
Medicare MSA plans are not available everywhere. Call 1-800-MEDICARE 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.