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What You Need to Know about Medicare Medical Savings Account (MSA) Plans

Many Americans are familiar with Health Savings Account Plans. Medicare Medical Savings Account (MSA) Plans are a type of consumer-directed Medicare Advantage Plan available to many seniors who are enrolled in high-deductible Medicare plans. The plans have been available to Medicare beneficiaries since 2007 and are offered by private insurance companies who work with Medicare.

What is a Medicare MSA Plan?

A Medicare Medical Savings Account (MSA) plan (1) is a type of Medicare Advantage plan used in combination with a Medicare high-deductible health plan (2). Enrollees of Medicare MSA Plans start the year by using their savings account to pay for health care expenses, and then receive coverage from the high-deductible insurance plan once they reach their deductible.

  1. A Medicare high-deductible health plan is type of Medicare Advantage Plan that will only begin to cover medical costs once you meet a high yearly deductible, which varies by plan.

  2. A Medicare Medical Savings Account is a special type of savings account that deposits money into your savings account. Members use the money to pay for health care costs before they meet their deductible.

Who can enroll in a Medicare MSA Plan?

Most beneficiaries with both Medicare Part A and Part B can enroll in a MSA plan. However, anyone who has other types of health insurance in addition to Medicare is generally not eligible. Other types of health insurance that would usually preclude a senior from qualifying for a MSA Plan are:

  • Medicaid

  • Employer or union group health plan


  • Veterans health care

  • Federal Employee Health Benefits Program (FEHBP)

Other groups of people who would generally not qualify for a MSA Plan are those:

  • With End-Stage Renal Disease

  • Who are currently getting hospice care

  • Who live outside of the United States 183+ days a year

Benefits of Medicare Medical Savings Accounts

There are many benefits to a Medicare Medical Savings, including:

  • Members can choose their health care services and providers, which means more control over health care use, while still providing coverage against catastrophic health care expenses.

  • No monthly premium*. In fact, enrollees cannot deposit their own money into the account. Medicare pays a set amount of money to the companies that administer these plans and that money is then deposited into the savings account at the beginning of each year.

  • Medicare Part A and Part B expenses count toward the MSA plan deductible.

  • Enrollees can use their account to pay for any qualified medical expense, including for non-Medicare expenses BUT non-Medicare expenses such as dental care do not count toward the plan deductible.

  • Account withdrawals for any qualified medical expense are not taxed.

*You will still need to pay your Part B premium.

Do Medicare MSA Plans cover all standard Medicare services?

Yes, Medicare MSA Plans must cover the same mandatory services that all Medicare Advantage Plans cover. Some MSA Plans also cover additional services such as dental, hearing, vision and long-term care.

One thing to know is that Medicare MSA Plans do not cover prescription drugs. Kupuna who opt for an MSA Plan and require drug coverage will need to join a Medicare Part D prescription drug plan. Here are a couple of other things to know:

  • MSA savings account withdrawals for Part D drug co-pays do count toward the Prescription Drug Plan’s out of pocket spending limit, called TROOP.

  • Withdrawals made to the MSA account for either prescription or non-prescription drugs are not taxed.

Before signing up for an MSA Plan, seniors should identify both the deposit amount that will go into the savings account and the deductible amount of a plan before enrolling. Speak to a local Medicare agent who can help you find the right Medicare insurance plan for your needs.

Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.

At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.

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