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Medicare Advantage MSA Plans (Medical Savings Account)

Medicare Advantage MSA plans provide seniors with the best of both worlds. A Medicare Medical Savings Account (MSA) Plan will combine the benefits of having a high-deductible Medicare Advantage plan with a Medical Savings Account (MSA) by working similarly to health savings account plans for people enrolled in an individual or employer-sponsored insurance.

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What is a Medicare Advantage MSA?

A Medicare MSA is a type of Medicare Advantage policy that provides a Health Savings Account in addition to the health benefits of the plan.

Two parts make up your Medicare Advantage MSA:

  1. A high-deductible Medicare Advantage Plan: All Medicare Advantage plans offer Medicare Part A and Part B benefits. But with a high deductible plan, you must pay the deductible amount yourself before Medicare begins to pay. Once you reach your deductible, your Medicare coverage pays all your covered costs.
  2. A Medical Savings Account: Each year, Medicare will deposit a specified amount of money into your Medical Savings Account. If you use this money for expenses covered by Medicare, your spending will count toward your deductible.

Overall, your Medicare Advantage MSA allows you to control the money you spend on healthcare, all while providing you coverage from excessive healthcare costs.

Who is Eligible for a Medicare MSA?

Anyone eligible for Medicare is usually eligible for a Medicare Advantage plan, including an MSA plan.

If you’re already on Medicare or have a different Medicare Advantage plan, you may not be able to switch to an MSA plan until the next Annual Election Period, which occurs October 15 through December 7 each year. During this time, Medicare Advantage enrollees can switch back to Original Medicare or a different Medicare Advantage plan.

The Medicare Advantage Open Enrollment Period (MAOEP) runs annually between January 1 and March 31. If you are unhappy with your Medicare Advantage plan, the MAOEP is the time to do something about it by making a change.

Costs for a Medicare Advantage MSA Plan

Your Medicare Advantage MSA premium varies by plan. You’ll also still need to pay your monthly Medicare Part B premium. Your out-of-pocket costs will also vary depending on your plan and how you spend the money in your Medical Savings Account.

Different plans have different deductibles, and the amount of money Medicare deposits in your account will vary as well.

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For example, you might have an MSA plan with a $4,000 deductible and Medicare depositing $2,500 into your MSA each year. If you spend the entire $2,500 on Medicare-covered medical expenses, you will have met $2,500 of your deductible. If you have additional medical expenses, you can spend $1,500 of your own money before Medicare pays.

Suppose you spent the $2,500 in your Medicare MSA differently, for example, $1,500 on the dentist and $1,000 on medical expenses. Only the $1,000 counts toward your deductible, meaning you must spend another $3,000 on medical costs. In doing so, you satisfy the deductible, and Medicare pays. Once you reach your deductible, the MSA plan will pay for all services covered by Medicare.

How Does a Medicare Medical Savings Account Work?

Your Medicare Advantage MSA plan combines a savings plan with high-deductible coverage. The plan can pay for healthcare costs and is commonly used to cover healthcare costs before you meet the deductible.

Medicare gives the plan money to handle your claims. Your plan then deposits some of that money into your Medicare MSA. Seniors can’t add their own funds to the MSA.

It’s important to note that not all costs count toward your annual deductible. The expenses must relate to Medicare Part A or Medicare Part B. Seniors will need to purchase additional Medicare Part D prescription drug coverage.

If there are funds in the account at the end of the year, they remain in the account as long as you’re enrollment status remains active the following year. Also, funds from Medicare Advantage MSAs grow interest-free and tax-free.

A Medicare MSA plan is best for those in good health, only visiting the doctor a couple of times annually. Your deductible and deposit amount depend greatly on the policy you select.

Is an MSA the Same as an HSA?

An MSA is not the same as an HSA. However, many similarities are present. Both allow you to roll over funds from the previous year. Also, these policies offer tax benefits and long-term savings options. Although these plans have many differences.

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What’s the Difference Between an HSA and MSA?

An HSA is a Health Savings Account. A health savings account is usually combined with a high-deductible policy. HSA plans are similar to MSA plans outside Medicare. MSA coverage is a Medical Savings plan. This plan can help cover Medicare beneficiary expenses. With an HSA, you can contribute to the savings before Medicare. In an MSA, Medicare contributes, not you.

Medicare Medical Savings Account Pros and Cons

The most significant upside of a Medicare Advantage MSA is that the money not used goes back to the account the following year. Money in your plan also earns interest. If you’re healthy and don’t have a lot of medical expenses, you can spend what you need and save the rest to cover your medical costs.

However, Medicare Medical Savings Accounts are not best for everyone:

  • Medicare Advantage MSA plans may not be available in your area. Only about 5,000 Medicare Advantage enrollees are in MSA plans, as only a handful of insurance companies offer them.
  • You must be able to afford the deductible. Medicare plus a Medicare Supplement gives you a predictable premium each month. A plan with a Medicare Medical Savings Account comes with a lower premiums but can leave you with a big medical bill to pay before you reach your deductible. It’s important to be aware of potential costs.
  • Medicare Advantage MSAs do not cover prescriptions, but there may be add-on coverage available for vision and dental. You can buy a standalone Medicare Part D plan if you choose a plan with a Medicare MSA.
  • You cannot get Medigap or Medicare Supplement plans while enrolled in a Medicare Advantage plan. Therefore, you must cover out-of-pocket costs. Medigap plans are only available if you have traditional (Original) Medicare.

The Difference Between FSA and MSA

An MSA is generally for Medicare beneficiaries and a flexible spending account (FSA) is mainly given to employees where this coverage is optional.

Flexible spending accounts have a “use it or lose it” benefit. So, the funds in the next year won’t roll over. Although, some plan administrators may offer a small grace period. FSAs aren’t a great long-term savings strategy, even for those who benefit from tax savings they can provide.

If you change employers, you might lose the FSA. If you don’t qualify for an HSA, an FSA could be a good option. Funds for FSAs aren’t usually available for non-medical reasons, unlike a Medicare Advantage MSA.

Can You Use MSA Money To Pay for Medicare Premiums?

You can use funds from your MSA to pay for Medicare premiums. However, you can’t contribute funds to your Health Savings Account while enrolled in Medicare. Most enrollees don’t have a premium other than for Medicare Part B, which varies by income. The beneficiary is responsible for the Medicare Part B premium.

Seniors with an HSA can pay for Medicare Part B premiums, Medicare Advantage premiums, Medicare Part D premiums, long-term care insurance, copayments, and deductibles. HSA accounts can’t pay Medicare Supplement plan premiums.

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How to Set up a Medicare Medical Savings Account

Setting up your Medicare Advantage MSA is typically a simple process. After selecting your plan, you’ll have to open a savings account with the bank chosen by your Medicare provider.

Once your account is open, you’ll be officially enrolled. A letter with your effective coverage date will come once everything is ready to go you notify your insurance provider.

Funds from Medicare are deposited by your insurance carrier into your MSA. Enrollees cannot add funds to this account and after all of the money has been spent, you’ll need to pay out of your own pocket until meeting your plan’s deductible.

Please note that healthcare providers aren’t allowed to charge more than the amounts Medicare approves for healthcare services.

Depending on the bank, you may receive a debit or credit card that you can use to pay expenses directly from your MSA.

You can use your Medicare MSA for anything you want, including non-healthcare costs, but the best advantages come from using the funds for your healthcare expenses:

  • If you use the MSA to pay medical expenses covered by Medicare, such as hospital bills, tests, or a specialist, then the money you spend counts toward your annual MSA plan deductible.
  • Use your Medicare Advantage MSA to pay for healthcare expenses that Medicare doesn’t cover, such as the dentist, and your spending will not count toward your deductible.
  • If you use your Medicare Medical Savings Account to pay for something else, such as a car repair, you’ll also pay the penalty in addition to taxes on the money used.

How to Enroll in a Medicare Advantage MSA Plan

Enrolling in a Medicare MSA can help you, depending on your needs. Here at MedicareFAQ, we work hard so that you don’t have to. We search the top insurance companies in your area for the best rates and coverage tailored to your personal healthcare needs.

Let our agents help you find the right Medicare Advantage MSA plan. Call us at the number above, or fill out our form for rates in your area.

Kayla Hopkins

Kayla Hopkins

Content Editor
Kayla Hopkins is an accomplished writer and Medicare educator serving as the Editor of MedicareFAQ.com. Upon completing her Communications degree from Ohio University, Kayla dedicated her time to understanding the ever-evolving landscape of healthcare. With her extensive background as a Licensed Insurance Agent, she brings a wealth of knowledge and expertise to her writing.
Ashlee Zareczny

Ashlee Zareczny

Compliance Manager
Ashlee Zareczny is the Compliance Manager for MedicareFAQ. As a licensed Medicare agent in all 50 states, she is dedicated to educating those eligible for Medicare by providing the necessary resources and tools. Additionally, Ashlee trains new and tenured Medicare agents on CMS compliance guidelines. Ashlee is a Medicare expert who specializes in Medicare Supplement, Medicare Advantage, and Medicare Part D education.

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