Medicare-Sponsored Medical Savings Account (MSA)

A Medicare-Sponsored Medical Savings Account (MSA) is a type of Medicare Advantage plan that combines a high-deductible health plan with a savings account. It is designed for individuals who are willing to take on more out-of-pocket costs in exchange for lower premiums and the ability to save money tax-free to pay for healthcare expenses. Here are some key features of Medicare-Sponsored MSA:

• High-deductible health plan: The Medicare-Sponsored MSA has a high deductible that you must pay before the plan starts to pay for your healthcare expenses. In 2021, the deductible is $7,550.

• Savings account: The plan also includes a savings account that the Medicare program funds each year. The money in the savings account can be used to pay for your healthcare expenses, including the deductible.

• Tax advantages: The money you contribute to the savings account is tax-free. If you use the money for eligible healthcare expenses, you do not have to pay taxes on the withdrawals.

• Network: Medicare-Sponsored MSA plans may have a network of healthcare providers, but you can also see providers outside of the network. However, you may pay more for out-of-network services.

• Premiums: Medicare-Sponsored MSA plans have lower premiums than other Medicare Advantage plans because they have a high deductible. You must also continue to pay your Medicare Part B premium.

• Flexibility: The savings account can be used to pay for any healthcare expense covered by Medicare, including prescription drugs. You can also use the money to pay for your deductible and other out-of-pocket costs.

Example:

Let's say you enroll in a Medicare-Sponsored MSA plan. Medicare funds your savings account with $4,000 for the year. You can use this money to pay for your healthcare expenses, including the deductible.

In January, you have a doctor's appointment that costs $200. You can use the money in your savings account to pay for this expense.

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