Plans by private companies that the federal government pays to administer Medicare benefits are knowns as Medicare Savings Account plans (MSA). Like Medicare Advantage plans, they provide all of the same benefits, protections, and the like as Original Medicare. However, they may apply different rules, restrictions, and costs. Some MSA plans will include vision and hearing care as part of their benefits. The difference between an MSA and other Medicare Advantage plans is that it consists of a bank account to help cover medical costs in addition to the HDHP (high deductible health plan).

HDHPs have a large deductible that you must meet before you receive coverage; meaning, If you enroll in an HDHP, you will pay in full for services until you reach your deductible each year. Afterward, the HDHP covers all of your costs.

MSAs include a bank account that your plan will deposit funds into once a year for your medical expenses. You can use this money to pay your deductible.

  • Your plan will choose the bank account and how much it will contribute. Generally, the contribution is lower than the deductible itself.
  • Funds put into an MSA are not taxed so long as they are used for qualified medical expenses
  • Once the money in the account is spent, you must pay out of pocket for your deductible.

It is important to note that you will have high out-of-pocket costs for care until your deductible is met. Then, the MSA will cover 100% of your expenses.

You must have both Medicare Part A & Medicare Part B to enroll in an HDHP and MSA. Generally, you will continue to pay your premium for Part B as well. Some MSA plans will charge an additional premium.

Some MSA plans also do not offer Part D coverage, so you may have to enroll in a stand-alone Part D plan for prescription drug coverage.

The only times you can enroll in an MSA plan are when you first sign up for Medicare Part B or during the Fall Open Enrollment Period (Oct 15 – Dec 7).

It is important to note that you cannot do the following:

  • Join an MSA plan if you have any other type of health insurance (this includes Medicaid, Veteran’s Affairs benefits, Federal Employee Health Benefits, employer, or retiree insurance)
  • Have any employer-sponsored or retiree coverage that would help pay your MSA deductible. If you are still employed, talk to your HR representative or benefits manager to learn more about your specific situation.

MSA plans have provider networks; you will pay less if you receive care in an “in-network” facility. All plans do cover “out-of-network” care but at a steeper cost.

MSA plans are not available everywhere – call 1-800-MEDICARE or your State Health Insurance Program (SHIP) to find out about MSA plans in your area. To make sure you’re making an informed decision, talk to a representative like us at Medicare Pathways to figure out what’s best for you. Call Medicare Pathways today!