There are several types of Medicare Advantage plans to choose from. Before you decide which type you want, you’ll need to learn a little bit about each of them so that you can make an informed decision. Individuals who have had a high-deductible insurance plan with an employer and are now transitioning into Medicare sometimes find an MSA plan appealing.
What is a Medicare Advantage MSA plan, and who should consider one of these plans? Let’s find out.
The Medicare Advantage MSA Plan
You have probably heard of an HSA, a Health Savings Account. Individuals and families with a high-deductible health plan have the option to open an HSA. They (and their employer) can contribute funds to the HSA tax-free. If that money is used on qualifying medical expenses, it is also spent tax-free. Money in the HSA account can be kept as cash or invested.
A Medicare Advantage MSA account is very similar. MSA stands for Medical Savings Account. MSA plans have a high deductible but always a $0 monthly premium. The average deductible for one of these plans ranges from $3,000 to $5,000. The plan offers no coverage until the deductible has been met. Unlike other Medicare Advantage plans, MSA plans don’t usually offer extra benefits, such as dental, vision, and hearing care. In addition, they do not offer prescription drug coverage. You will need to enroll in a separate Part D plan. An MSA is one of two types of Medicare Advantage plans that allow you to do this. (The other option is a PFFS (Private Fee-for-Service) plan.
Individuals cannot contribute money to their MSA themselves. However, the insurance company providing the plan will typically make a lump-sum deposit into the account at the beginning of the year. That lump sum depends on the plan. It can be used to help with the deductible cost, though it’s important to note that the deductible will always be higher than what the company contributes. Some plans may allow you to invest the funds, but those options are usually limited.
Once the deductible has been met, the plan begins to cover medical expenses at a rate of 100%. The individual has no more out-of-pocket expenses.
If the initial deposit is not spent, it will remain in the account for the following year. Another deposit will be made at that time. If not used for several years, the amount in the MSA can accumulate significantly.
Good Candidates for an MSA Plan
If you’re used to having a high-deductible plan, you may be a great candidate for a Medicare Advantage MSA account. These are great for individuals who can afford to pay the higher deductible and out-of-pocket costs.
An MSA would also be an excellent option for a healthy individual who rarely visits the doctor and would never pay the entire deductible. They could use the MSA account as a savings account and use those funds to pay for healthcare down the road.
On the other hand, these can also be a great option for someone who is facing high premiums with their current Medicare supplement and can no longer afford the plan. Some coverage is better than no coverage. Individuals who have high medical costs may also benefit since their portion will be paid 100% after the deductible.
Individuals Who Should not Consider an MSA Plan
Individuals who are not financially stable should not consider one of these plans. The high deductible can put a lot of financial strain on an already unstable condition. If the strain is so much that the individual chooses to forgo medical care, the consequences could be extreme.
If you are thinking about a Medicare Medical Savings Account, contact Carolina Senior Benefits today! There are a few options available with varying premiums, deductibles, and initial deposits. They can be a great option in a variety of situations. Talk it over with your licensed agent and find out if an MSA plan is right for you.
