A Medicare Medical Savings Account (MSA) plan is a type of Medicare Advantage plan that combines a high-deductible health plan with a medical savings account. Enrollees of Medicare MSA plans can initially use their savings account to help pay for health care, and then will have coverage through a high-deductible insurance plan once they reach their deductible. Medicare MSA plans provide Medicare beneficiaries with more control over health care utilization, while still providing coverage against catastrophic health care expenses. In Demonstration MSA plans, some MSA provisions are waived to make the plans more like other consumer-directed health plans, such as health savings accounts (HSAs) available in the private sector.
Basic Steps to Using a Medicare Medical Savings Account (MSA) Plan
1. You choose and join a high-deductible Medicare MSA Plan.
2. You set up a special Medical Savings Account (MSA) with a bank the plan selects.
3. Medicare gives the plan an amount of money each year for your health care.
4. The plan deposits some money into your account. The money in your account and any interest on that money isn’t subject to taxes as long as the money is used for health care costs. You may move the money to another bank.
5. You can use the money in your account to pay your health care costs, including health care costs that aren’t covered by Medicare. When you use account money for Medicare-covered Part A (Hospital Insurance) and Part B (Medical Insurance) services, it counts toward your plan’s deductible.
6. If you use all of the money in your account and you have additional health care costs, you will have to pay for your Medicare-covered services out-of-pocket until you reach your plan’s deductible.
7. During the time you’re paying out-of-pocket for services before the deductible is met, doctors and other providers can’t charge you more than the Medicare-approved amount.
8. After you reach your deductible, your plan will cover your Medicarecovered services. Read information from the plan for details about out-ofpocket costs.
9. Money left in your account at the end of the year stays in the account, and may be used for health care costs in future years.
10. If you use any funds from your account, you must include a special form with information on how you used your account when you file taxes.
It’s important to know you can only use your money in your MSA to cover Part A and Part B Medicare expenses. There are exceptions made for things like Dental, Vision, Part D prescription drugs. If you follow these simple guidlines you do not have to claim that money on your taxes. But, generally if you use the account for non-medical things like groceries or utilities you would have to claim that money on your taxes.
Lastly MSA plans are not allowed to include Part D drug coverage. You would need a separate Part D drug plan to avoid the penalty for not having one.
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