What are MSA plans and how to do they work?
An MSA is a high deductible health insurance plan combined with a savings account that you can use to pay for your health care costs. Since this is a type of Medicare plan, Medicare provides the funding.
Medicare.gov has a handy 10 step breakdown of how MSAs work.
- Choose and join a high-deductible Medicare MSA Plan.
- You set up an 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.
- You can use the money in your account to pay your health care costs, including health care costs that aren’t covered by Medicare. When you use account money for Medicare-covered Part A and Part B services, it counts towards your plan’s deductible.
- If you use all of the money in your account and you have additional health care costs, you’ll 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 funds from your account, you must include this special form [PDF, 89.4 KB] with information on how you used your account money when you file taxes.
The available states in the West are now MT, WY, UT, AZ, NV, NM, and OR. Unfortunately, MSA plans are currently not available in WA, ID, CA, and CO.
How MSA plans work
When you see your medical provider, you present your MSA ID card to your provider’s billing office. The provider bills the MSA plan. The bill comes back to you, and you pay you provider from your debit card account. Meanwhile, the MSA plan applies that amount to your deductible. Never pay your provider prior to them billing the MSA plan.
MSA plans do not provide prescription drug coverage. Medicare beneficiaries who are enrolled in an MSA plan and who also wish to have drug coverage, will need to enroll in a stand-alone Part D prescription drug plan.
Q: Where do MSA plans get the money to set up my debit card account?
A: Remember, Medicare advantage (MA) plans are privatized Medicare plans. Let’s say that an MA plan without Rx coverage receives around $800 per person per month from Medicare to provide your health coverage. Out of that, MSA plans can fund your debit card account.
Q: Let’s say I spend $500 on doctor bills for 2021, what happens to the $1,500 still remaining in my debit card account?
A: Your unused funds rollover and will be available for a future year. This is not a “use it or lose it” deal. If you don’t use it, it rolls over.
Q: What happens if I exhaust my debit card account and still have more medical bills?
A: Your responsibility is to cover your bills until you reach your deductible. Once you have met your deductible, your MSA plan pays 100% of your Medicare approved expenses for the remainder of the year.
Q: What about networks. Am I restricted to a doctor network?
A: There are no networks with MSA plans. Most any provider that works with Medicare should be willing to accept your MSA plan. That’s great news for snowbirds or those who travel to other states.
Q: What about preventative checkups? How are they covered?
A: Unlike other Medicare advantage plans, there are no, zero copay physicals or other preventative services. Your provider will bill the plan, and then you’ll pay your physician from your debit card account.
Q: Can I use my MSA funds to pay for vision or dental services?
A: Yes. In addition, you can also use your MSA account for hearing aids, hearing aid batteries, prescription copays, and long-term care expenses. Please note: Using money in your account to pay for health care costs that aren’t covered by Medicare will not count toward your MSA plan’s deductible.
Q: Who can enroll in an MSA plan?
A: Most people who are on Medicare Parts A and B and reside in a state where an MSA plan is offered are eligible to sign up. You will need to decide if the program is right for you. There are some people that are ineligible to enroll in the MSA program. These exceptions primarily are those receiving VA or Medicaid benefits.
The following are some of the reasons why Medicare beneficiaries have enrolled in an MSA program.
- Those that like the idea of a no premium plan.
- Those that live in a county where no other Medicare advantage (MA) plans are offered. Many of the sparsely populated counties of Montana, Wyoming, and Oregon have no other MA plans to choose from.
- Those that do little or infrequent doctoring.
- Those that like the idea of having funds available for dental or vision.
- Those that prefer to have their own standalone Part D Prescription (PDP) plan.
- Those who are looking for an alternative to their Medicare supplement plan and don’t want or can’t get a standard HMO or PPO Medicare Advantage plan.
Important Information for Existing MSA plan Members
If you are already a member of an MSA plan, your membership for 2022 will automatically renew. Be sure to read your annual notice of change to keep informed of any changes to your plan. The MSA company is also offering a second version of their plan with a larger debit deposit and a larger deductible. Please contact us for details.
Please contact us with questions about this MSA plan or your interest in any other Medicare advantage plan. There are some situations where a switch to the MSA plan may be a good fit for your situation. Here are some examples.
Case #1: Alice is in her 90s and is on an old Plan F with a premium of over $300 per month. She has a medical condition which makes it difficult for her to switch to another Medicare supplement plan. She lives in a sparsely populated county that has no other Medicare advantage plans. Her out-of-pocket will hundreds of dollars less than the annual $3,600 Medsupp premium.
Case #2: Martha has Medicare supplement Plan L. Since there is a fair amount of cost-sharing with Plan L, the maximum circuit breaker limit rises to $3,110 in 2021. By the time she adds in her annual premium for Plan L and her cost-sharing, she could be out hundreds more with Plan L compared to the MSA plan.
Case #3: Bill has Medicare supplement Plan K. In 2020 his circuit breaker limit is $6,220. That’s more than double of what him maximum out-of-pocket would be with the MSA plan.
Case # 4: Shirley’s Plan F has climbed to $200 monthly, and she would like to shop for a lower cost Medsupp. Unfortunately, she has a COPD diagnosis making it impossible for her to switch to a lower cost Medsupp. The MSA plan may be a good alternative for her. There is no medical underwriting.
Please contact us for complete details to see if the MSA plan is a good fit for you. End