Medicare Medical Savings Account Plans (MSAs) are available to Medicare Advantage Plan enrollees and are a type of medical savings account that is combined with a high-deductible plan. The MSA plan can be customized to the enrollees’ coverage and cost preferences. It’s administered through Medicare-approved private insurance companies.
Considering enrollees will have a high deductible threshold to hit before they start receiving coverage, the MSA will have a bank account where the plan provider will annually deposit funds into the account. The participant can use the funds in the account can be used pay for their deductible. The MSA plan has 2 components:
- High Deductible Health Plan (HDHP): This part provides a “special type” of high deductible, the Medicare Advantage (Part C) coverage starts when the annual high deductible is met. This deductible threshold can vary by the Medicare Advantage plan.
- Medical Savings Account: The enrollee’s insurance company deposits money into a “special savings account” for the participant to use to help pay for health care expenses. The amount of the required deposit varies by the plan. The money is available for the enrollee to use to pay for Medicare-covered expenses before they meet their deductible.
What Do Medicare Medical Savings Account Plans Cover?
A Medicare Medical Savings Account plan typically covers all the services that Medicare Advantage Plans have along with the option to select dental or vision coverage. Usually, an MSA plan will not have a healthcare network like PPO’s and HMO’s. The enrollee will have the freedom to choose their healthcare provider, hospital, and physician while the plan will select the bank account to be used for the MSA.
How Funds and Costs in an MSA are Handled:
- Medicare gives the plan an annual amount of money for your health care and the plan deposits some money into the account.
- When you use the account money for Part A or Part B covered services, it counts towards your deductible.
- During the time that you pay out-of-pocket for services before your deductible is met, physicians or other health care providers cannot charge you more than the Medicare-approved amount.
You do not pay a monthly premium but must continue to pay your monthly Part B premium. Once you meet the high deductible for the MSA plan, the plan pays for all your Medicare-covered services. The high deductible essentially is the out-of-pocket maximum that all Medicare Advantage plans have.
What are the Eligibility Rules for Medicare Medical Savings Account Plans?
There are several medical savings account rules regarding joining and leaving MSA plans. Most individuals who are eligible for Medicare Part A and Part B are eligible to join an MSA. You may join a Medicare Medical Savings Account plan when you first become eligible for Medicare or during the annual open enrollment period.
There are several exclusions to joining an MSA. You cannot join a Medicare Medical Savings Account plan if you have another type of insurance coverage, such as Federal Employee Health Benefits, Medicaid, Veteran’s Affairs benefits, union group insurance plan, retiree plan insurance coverage or most employer-based insurance coverage. Check with Medicare if you are not sure if you are eligible based on this rule.
There are several exclusions that prevent a person from joining a Medicare Medical Savings Account plan, including:
- You currently receive hospice care
- You have End-Stage Renal Disease (ESRD) with the exception that if you are a former enrollee of a Medicare Advantage Plan that left Medicare and you have not joined another Medicare part C plan, you can join an MSA even with ESRD
- You reside outside the U.S. more than a total of 183 days a year
- You have any type of health coverage that would cover the Medicare Medical Savings account deductible
- You can leave your plan during any open enrollment period. Your disenrollment takes effect on January 1st of the next calendar year. Some enrollees, such as those entering a nursing home or moving out of a plan’s area, may disenroll at other times.
What Else Do I Need to Know About a Medicare Medical Savings Account Plan?
You have the same rights and protections that you have under Original Medicare if you join a medical saving account plan. You can see any doctor who accepts Medicare.
Money in your MSA that you spend on Qualified Medical Expenses is not subject to income tax.
Individual plans vary, so contact plans in your area for information about actual deposit information, deductible, and co-payment amounts. Ask for maximum out-of-pocket information.
- Medical Savings Account, CMS.
- What’s a Medicare MSA Plan?, Medicare.
- Examples of Medicare Medical Savings Account (MSA) Plans, Medicare.
- Your Guide to MSA Plans, CMS.
- Medicare Advantage MSA Guide, CMS.