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Posted 12/06/2021 in Category 1

What Is a Medicare Advantage MSA Plan?

What Is a Medicare Advantage MSA Plan?

There are a few types of Medicare Advantage plans to choose from. Before you decide which type you want, you'll need to learn a little bit about each of them so that you can make an informed decision. Individuals who have had a high deductible insurance plan with an employer and are now transitioning into Medicare sometimes find an MSA plan appealing.

What is an MSA plan, and who should consider one of these plans? Let's discuss.

The Medicare Advantage MSA Plan

You have probably heard of an HSA - a Health Savings Account. Individuals with a high-deductible health plan have the option to open an HSA. They (and their employer) can contribute money to the HSA tax-free. If that money is used on qualifying medical expenses, it is also spent tax-free. Money in the HSA account could be kept as cash or invested.

A Medicare Advantage MSA account is similar. MSA stands for Medical Savings Account. MSA plans have a high deductible but often a $0 monthly premium. The average deductible for one of these plans ranges from $3000 to $5000. The plan offers no coverage until the deductible has been met. Like other Medicare Advantage plans, MSA plans usually offer additional benefits not seen in Original Medicare, such as dental, vision, and hearing care. They may also include prescription drug coverage.

Individuals cannot contribute money to their MSA themselves, nor can they invest the money. However, the insurance company providing the plan will typically make a lump-sum deposit into the account at the beginning of the year. That lump-sum depends on the plan. It can be used to help with the deductible cost, though it's important to note that the deductible will always be higher than what the company contributes.

Once the deductible has been met, the plan begins to cover medical expenses, usually at 100%. The individual has no more out-of-pocket expenses. Again, this coverage will vary by plan.

If the initial deposit is not spent, it will remain in the account for the following year. Another deposit will be made at that time. If not used for several years, the amount in the MSA can accumulate significantly.

Good Candidates for an MSA Plan

If you're used to having a high-deductible plan, you may be a great candidate for a Medicare Advantage MSA account. These are great for individuals who can afford to pay the higher deductible and out-of-pocket costs.

An MSA would also be a great option for a healthy individual who rarely visits the doctor and would never pay the entire deductible. They could use the MSA account as a savings account and use those funds to pay for healthcare down the road.

On the opposite side, these can also be a great option for someone who is facing high premiums with their current Medicare supplement and can no longer afford the plan. Some coverage is better than no coverage. Individuals who have high medical costs may also benefit since their portion will be paid at 100% after the deductible.

Individuals Who Should not Consider an MSA Plan

Individuals who are not financially stable should not consider one of these plans. The high deductible can put a lot of financial strain on an already unstable condition. If the strain is so much that the individual chooses to forgo medical care, the consequences could be extreme.

If you are thinking about a Medicare Medical Savings Account, contact us today! There are a few options available with varying premiums, deductibles, and initial deposits. They can be a great option in a variety of situations. Talk it over with your licensed agent and find out if an MSA plan is right for you.