Medicare MSA plans are Medical Savings Accounts similar to an HSA with traditional insurance. They offer tax benefits, savings, and $0 premiums. Let us explain.

What is a Medicare MSA Plan?

Medicare MSA plans are actually Medicare Advantage plans, called a consumer directed Medicare Advantage plan, which is known as a Medicare Advantage MSA. These plans are generally HMOs and offer limited networks of doctors and hospitals while adding extras such as dental, vision, and hearing.

How do Medicare MSAs Work?

Medicare MSAs work by creating a savings account in which you deposit money each year to cover health costs. This may seem a little confusing at first, so bare with me. This is how they work:

  • MSAs have a $0 monthly premium
  • You still pay for Medicare Part B premium (unless your plan covers it)
  • You put pre-tax money into your MSA through your employer
  • The money put into your MSA rolls over year after year
  • The money and interest in your account is NOT taxed*
  • MSAs have a set, high deductible that must be met before it covers any of your health costs
  • You may receive an MSA debit card used to pay for Part A and Part B care

*If you use the money for non-qualifying services you will be taxed and may have a 50% tax penalty.

Why Choose a Medicare MSA?

Besides the low monthly premium, most people choose an MSA because they are able to put away money for their health costs without paying taxes on it. This may not be doable for everyone, because some people may not want to have to pay out thousands of dollars before Medicare Advantage pays your bills, but for others it is a smart health option.

Do MSAs Cover Drugs?

No. Even though most Medicare Advantage plans do cover drugs, Medicare Advantage MSAs do not. You will want to get a separate Medicare prescription drug plan.

What Happens To $$ Left in an MSA?

Like I said earlier, each year the money will roll over. However, if you or a loved were to pass away with money in an MSA all the money is transferred to the beneficiary. If that beneficiary is a spouse the money is tax-free.

For further questions about traditional Medicare Advantage plans or Medicare Advantage MSAs call the number above or contact Senior65.com.