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Most people aren’t aware of an innovative Medicare health plan that gives you money each year to use on Medical expenses. The Medicare Medical Savings Account, or MSA, is a type of Medicare Advantage Plan. However, unlike other Medicare Advantage Plans, an MSA deposits money into special accounts for its members.

How does it work?

An MSA combines a high-deductible health plan with a savings account. At the beginning of the year (or when you enroll if you are new to Medicare), the plan deposits a lump sum into your medical savings account.

You have the discretion to use these funds for the qualifying medical treatments you choose. You also have the option to pay for your medical expenses out-of-pocket and save the funds for future costs.

If you reach your deductible for the year, your plan pays 100% of Medicare-covered services for the remainder of that year. While you cannot deposit your own money into the MSA, any leftover funds in your account are yours to keep.

8 reasons to consider an MSA

Getting money isn’t the only reason to look at an MSA plan. Consider these:

  • $0 premium. By law, MSA’s have a $0 premium, which means an ongoing cost savings to you.
  • No networks. Other Medicare Advantage Plans have networks of providers, either an HMO or PPO. With an MSA, you can see any doctor that accepts Medicare, which means you don’t have to worry about being restricted to a network set up by your plan.
  • Deductible. Once you reach your annual deductible, the plan pays 100% of costs for Medicare-covered services, giving you a financial guardrail.
  • Part D flexibility. Since MSA’s don’t come with a Part D prescription drug plan, you have the flexibility to find a Part D plan that works best for you.
  • Portability. The money in your medical savings account is portable, meaning you’ll keep the money even if you decide to leave the plan.
  • Option to invest. Many MSA accounts have the option to invest a portion of the funds in your MSA, giving you an opportunity to grow the account over time.
  • Annual enrollment. Like this option? You can enroll during the Medicare Annual Enrollment Period each fall without medical underwriting.

Who should enroll in an MSA?

Eligibility for enrolling in an MSA is broad. Unlike a Medicare Supplement, you don’t have to qualify through medical underwriting if you don’t sign up when first eligible.

Even though a lot of people are eligible, who would most likely benefit from this type of plan?

  • Individuals without chronic conditions (since they are less likely to hit their annual deductible).
  • A retiree who had a high deductible health plan with a Health Savings Account while working and is accustomed to this concept.
  • Active retirees who like traveling or have a vacation home in another state (since there is greater flexibility to see any doctor who accepts Medicare).
  • Individuals with high balances in their Health Savings Account heading into Medicare-eligibility (as this can help offset their annual “member responsibility”).
  • High-income individuals who are fine with the higher deductible and can pay the amount out-of-pocket.

Is an MSA right for you?

Despite being relatively unknown, the MSA is set to explode in popularity as more retirees are used to having a high deductible plan with an HSA. So, is it right for you?

The best thing you can do is to work with our Medicare advisor to compare your options. This includes looking at actual deductibles and deposit amounts for the MSA plans in your area, along with other Medicare Advantage Plans and Supplements.

The good news is the Medicare Annual Enrollment Period starts October 15! During this time, you can enroll in a Medicare Advantage Plan (including the MSA) and review your Part D Plan for any changes to its cost or prescription drug formulary.

We’ve made our calendar available to you! Since we can’t discuss 2021 plan-specific details until October 1, use this link to find a date and time that work for you.