Medicare Medical Savings Account Plans

Medicare Medical Savings Account Plans

Medicare Medical Savings Account (MSA) plans are a Medicare Advantage plan sold by insurance companies approved by Medicare. 

MSA plans are required to provide you with the same basic coverage as Original Medicare.

However, these plans offer additional benefits.

How does a Medicare Medical Savings Account work?

MSA plans come with a high deductible health plan (HDHP) and a bank account to help pay your medical costs. 

HDHPs, as you might have deduced, have a large deductible you must pay in full before receiving coverage. After you pay off the deductible, the HDHP covers all of your costs for the remainder of the year. 

As stated earlier, MSA plans also come with a bank account where the plan provider deposits funds each year for your medical expenses. You can use these funds to pay on the deductible. However, the amount contributed by the plan provider is lower than the deductible. 

Other important notes regarding MSA plans: 

  • Funds contributed to MSA plans are not taxed as long as they are used for qualified medical expenses.
  • You cannot personally deposit more money in your MSA bank account. Once you’ve used up all the money in the account, you pay out-of-pocket until the deductible is reached. 
  • If you have any money leftover at the end of the year, it will remain in the account for the following year. 
  • To be in a MSA plan you have to remain enrolled in Medicare Parts A and B.
  • These plans typically have provider networks. They are required to cover out-of-network care, but you may pay a higher cost.
  • MSA plans are not allowed to include Part D prescription drug coverage. If you would like prescription drug coverage, you have to join a standalone Part D plan
  • If you choose to join a Part D plan, out-of-pocket costs associated with the prescription drug plan do not count toward your MSA plan’s deductible.
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What do MSA plans cover?

A Medicare Medical Savings Account is a type of Medicare Advantage plan. This means it offers additional benefits that Original Medicare does not.

Such benefits can include: 

  • Adult day-care services
  • Dental
  • Fitness memberships
  • Hearing
  • Nutrition programs
  • Over-the-counter drugs
  • Services and supports for those with chronic conditions
  • Transportation to doctor visits
  • Vision
  • Wellness programs

Benefits you are eligible for will depend on your area and plan providers. 

It is important to note, any out-of-pocket costs associated with these additional benefits count as qualified medical expenses but do not count toward your deductible.

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When can I enroll in a Medicare Medical Savings Account?

If you are eligible for Medicare, you are eligible for an Advantage plan. But there are specific times in which you can enroll in a Part C plan:

Initial coverage election period — Your initial coverage election period is a seven-month period that starts three months before the month you turn 65 and ends three months after the month you turn 65. If you are under 65 and receive Social Security disability, you qualify for Medicare in the 25th month after you begin receiving your Social Security benefits. If that is how you are becoming eligible for Medicare, you can enroll into an Advantage plan three months before your month of eligibility until three months after you became eligible. 

Annual election period — Also known as open enrollment or AEP, the annual election period for Medicare Advantage is October 15 through December 7 every year. Coverage for the Part C plan you choose during this time will begin January 1 the next year. During this time, you can also add, change, or drop current coverage.

Medicare Advantage Open Enrollment Period — During this open enrollment period, you are able to change from one Advantage plan to another or drop it to return to Original Medicare.

Special Election Period — There are several things that can trigger a special election period and they are unique to an individual. It is best to speak to a licensed Medicare insurance agent to find out if you qualify for a special election period. However, there are a few common instances we can talk about. Such as, if you move outside your Medicare Advantage plan’s service area, qualify for extra help (such as a program that helps pay for your prescription drugs), or move into a nursing home you might qualify for a special election period. During this time you can make changes to your Advantage plan or return back to Original Medicare.

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