It is the goal of Medicare to offer people with the best health coverage, thus they work with private insurance companies. These companies may choose to offer a consumer-directed Medicare Advantage Plan, called a Medicare Medical Savings Account (MSA) Plan. It is a plan that combines a high-deductible health insurance plan with a medical savings account. This can be used to pay for your health care costs. In addition, the Medicare MSA Plans allow more freedom to control your health care investment and provide an important coverage against high healthcare expenses.
The Basics
Medicare MSA Plans are Medicare Advantage options. These are similar to Health Savings Accounts plan that are available outside of Medicare. If you choose to have this plan, you will still be in Medicare with all the rights and protections. The plan is divided into two parts: High deductible health plan and medical savings account.
High-Deductible Health Plan
- This is a special type of high-deductible Medicare Advantage Plan. It will cover your costs once you meet a high yearly deductible, which varies by plan.
Medical Savings Account
- This plan deposits money into your account. You may opt to use money from this savings account to pay your health care costs before you meet the deductible.
Steps to Using MSA Plan
- You choose and join a high-deductible Medicare MSA Plan.
- Set up a special Medical Savings Account (MSA) with a bank the plan selects.
- Medicare gives the plan an amount of money each year for your health care.
- The plan deposits some money into your account. The money and any interest on that money isn’t subject to taxes as long as it is used for health care costs.
- You can use the money in your account to pay your healthcare costs, such as healthcare costs that aren’t covered by Medicare. When you use account money for Medicare-covered Part A (Hospital Insurance) and Part B (Medical Insurance) services, it counts toward your plan’s deductible.
- If you use all of the money in your account and you have additional health care costs, you will have to pay for your Medicare-covered services out of pocket until you reach your plan’s deductible.
- During the time you’re paying (out-of-pocket) for services before the deductible is met, doctors and other providers can’t charge you more than the Medicare-approved amount.
- After you reach your deductible, your plan will cover your Medicare covered services. Read information from the plan for details about out of pocket costs.
- Money left in your account at the end of the year stays in the account, and may be used for health care costs in future years.
- If you use any funds from your account, you must include a special form with information on how you used your account when you file taxes.
Who Can Join a Medicare MSA Plan?
These are just some of the basic things about Medicare MSA Plans. There are still a lot of rules about Medicare MSA Plans, such as how they can be used, when money is taxed, and when you can join or leave the plan that you need to know about.