Glossary Term

Medicare Medical Savings Account

A Medicare Medical Savings Account (MSA) is a type of Medicare Advantage plan that combines a high deductible health plan with a savings account. The insurer providing the MSA deposits money in the MSA’s interest-bearing savings account at the beginning of the plan year and that money may be withdrawn tax free so long as it is used to pay for Medicare Part A or Part B health care expenses. Money in the savings account can also be used to pay for prescription drugs though a MSA itself does not provide Part D coverage. Medicare beneficiaries, however, do have the option of enrolling in a stand-alone Prescription Drug Plan while also enrolled in the MSA. This absence of prescription drug coverage within a Medicare Advantage plan is one of the reasons why MSAs have not proven popular with Medicare beneficiaries. Additionally, the costs of the deductible can be quite high even when considering the health plan’s yearly savings account contribution. For example, the 2024 plan year Network Health Prime MSA offered in Madison Wisconsin has a $5,100 annual deductible for a single enrollee with a $1,500 yearly deposit from the plan into the savings account.

A MSA does not charge a monthly premium and, while available to most Medicare beneficiaries, there are some groups who cannot join a MSA (such as people suffering from ESRD or dual eligibles).

A MSA can be used with any health care provider who accepts Medicare reimbursement, as opposed to traditional MA plans that have a network of providers from which to choose. If the money within the MSA’s savings account is completely used during a plan year, the enrollee pays out-of-pocket until the deductible is satisfied. If, on the other hand, some or all of the funds in the savings account are not used, that amount is rolled over for use in the next plan year.

MSAs are sometimes confused with Medicare Savings Programs (MSPs), which are not Medicare Advantage plans. MSPs are sponsored by state Medicaid programs and help people with limited incomes pay for Medicare out-of-pocket expenses.

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