Medicare Medical Savings Account (MSA)

Medicare Medical Savings Account Plans

Medicare medical savings account plans (or Medicare MSA Plans) are Medicare Advantage plans that come with a special tax-favored bank account, where Medicare will make an annual deposit every year. You can use this money to pay for medical expenses until you reach your deductible, or for Medical expenses that Medicare does not cover. 

How Medicare Medical Savings Accounts Work

Similar to a health savings account (HSA), Medicare MSA plans combine a high-deductible plan with a savings account to help pay for qualifying medical expenses. 

Medicare medical savings account check markHigh-deductible health plan

You must have a high-deductible MSA-qualified Medicare Advantage plan (Medicare Part C). After you meet that deductible, your plan will cover the rest of your qualified medical expenses 100%. 

Medicare MSA Plans Check

Only Medicare contributes to your account

It’s important to note that, unlike an HSA where you can contribute to the savings account, you cannot add money to the MSA. Once you’ve used the money, you must pay out-of-pocket until you meet your deductible. 

msa check

$0 premium

Currently available MSA plans have a $0 monthly premium.

Medicare medical savings account check

No network

You can see any provider that accepts Medicare.

Medicare MSA Plans Check

Medicare medical savings account

  • You set up an MSA bank account with that bank the plan uses.
  • Medicare will deposit a pre-determined amount of tax-free money into your medical savings account yearly, currently either $2000 or $3000, depending on the plan you choose.
  • That money can be used tax-free to pay for medical expenses while you’re waiting to hit your deductible, and for medical expenses Medicare does not cover, such as over-the-counter medications, dental expenses, eyeglasses, or alternative therapies.
  • If the money in your MSA account is not spent, it grows tax-deferred and can be withdrawn tax-free at any time in the future to pay for medical expenses.

What type of medical expenses can you pay for with your Medicare MSA Plan?

Funds from a Medicare MSA plan are generally used to pay medical charges you incur before reaching your deductible. But they can be used for virtually any medical expense, including:

Vision & Dental with your Medicare Medical Savings Account

Eyeglasses, dental expenses,
and hearing aids

These are common expenses people experience in their retirement years that Medicare does not cover.

msa alternative medicine

Alternative medicine

You are not restricted to spending your Medicare MSA plan money just on conventional allopathic medicine. You can use your funds to pay for virtually any type of alternative therapy, from acupuncture to reiki to crystal healing – as long as it is treatment for a specific health condition.

Medicine cabinet expenses

Virtually any over-the-counter medication can be paid for from your Medicare MSA plan, including pain relievers like aspirin, cold medicines, allergy medications, first aid supplies, and other similar items.

Elevated Care with your Medicare Medical Savings Account

Elevated care

Whether you want to get a second or third (or fourth) opinion, or would like to pay extra for a private hospital room, having money in a Medicare MSA plan can provide a level of healthcare freedom that most retirees don’t experience. 

medicare premiums

Medicare Premiums

You can also use MSA funds to pay Medicare premiums, including Medicare Part B, and Part D prescription drug plans.

Things to be Aware of with a Medicare Medical Savings Account

msa medicareMSAs do not include Medicare Part D prescription coverage. This gives you the flexibility to sign up for the best stand-alone Part D plan – a low-cost way to protect yourself from unexpected high prescription costs.

msa medicareYou can use the money in your Medicare MSA for non-medical purposes also, but it comes at a steep cost. Not only will you have to pay taxes on that withdrawal, but there is also a 50% penalty. That money will also not go towards meeting your deductible.

msa medicareThe annual deductible will be higher than the annual amount contributed to your Medicare MSA, so you will be at risk for some out of pocket expenses until the funds in your account exceed your deductible. 

msa medicareYou may also be able to invest your Medicare MSA money in mutual funds or other assets if the bank offers those options. 

Who Benefits from Having a Medicare Medical Savings Account?

Medicare Medical Savings AccountMedicare MSA plans are a fantastic option for people who don’t tend to use a lot of medical services and would like a way to build up additional funds to cover future medical expenses

Medicare MSA plans are favored by people who want to be able to choose their own doctor, but are looking for a less expensive alternative to a Medicare supplement plan. 

They also work well for people who tend to use alternative treatments, and those who want more control on where their healthcare dollars go. 

Sign Up or Get More Information

Signup for your Medicare MSA PlansYou can sign up for a Medicare MSA plan when you sign up for Medicare A and B, or during the Annual Enrollment Period that happens every year from October 15th till December 7th. 

Medigap Advisors offers Medicare MSA plans, so if you’re interested, we would love to talk to you more about them. Contact your Personal Benefits Manager to get that dialogue started, schedule a time to talk to one of our experts, or call us at 800-913-3416.