Medicare MSA Plan costs & financial considerations

What are my costs in a Medicare MSA Plan?

You won't have to pay a monthly 

Premium

 for your Medicare MSA Plan, but you'll continue to pay the monthly Part B premium.

The plan will only pay for Medicare-covered services once you have reached your 

Deductible [glossary]

. Before you meet the deductible, you're responsible for paying the bill for any Medicare-covered services. You have the option of using the funds in your account to pay these bills. Once you meet the plan's deductible, the plan pays for all of your Medicare-covered services.

The high yearly deductible can vary by plan. The yearly deductible is the amount of Medicare-covered health care costs you must pay for out-of-pocket or by using the funds in your account before your plan coverage begins. Find out the amount of the deductible before you join by contacting the plans you're interested in.

The yearly deposit and yearly deductible are pro-rated based on when your enrollment begins.

How much money goes into my account?

The amount of money that's deposited into your account will depend on the plan you choose. You should know the amount of the deposit before you join. Contact the plans you're interested in to get the deposit amount.

Each member in a plan will get the same deposited amount. Your health or age won't affect the amount of your deposit. The yearly deposit and the yearly deductible are pro-rated based on when you join the plan. The amount of deposit can change each year and may also earn interest.

When does the money go into my account?

The money is deposited once at the beginning of each calendar year. Or, the money is deposited the first month your coverage begins if both of these apply:

  • You become entitled to Medicare in the middle of the year
  • You join a Medicare MSA Plan at that time
Can I deposit my own money into my account?

You can't deposit your own money. Only the plan can make deposits into your MSA account.

Who will handle the money in my account?

You're responsible for handling the money in your account, including deciding whether to pay for health care services using your account funds or other funds you have.

Some plans have information on the cost and quality of providers in your area. This information may help you spend your money wisely and give you the best care possible. Contact your plan to find out what information they can give you.

How can I access the money in my account?

The bank your plan selects may give you a special debit or credit card to use with your account. When you have a medical expense, like a copayment for a doctor's visit, you could pay for it by using the card. The money will come out of your account.

Some banks may use a checking account without a debit or credit card. Check with the plans you're interested in to get the details about how to access the money in your account.

How can I use the money in my account?

You can use the money in your account for medical or non-medical expenses. However, only Medicare-covered Part A and Part B services count toward your deductible. Also, if you use the money in your account for non-qualified expenses, you must pay taxes and there may be additional penalties.

What happens if I use all of the money in my account?

If you use all of the money in your account and haven't met your deductible, you must pay for all of your medical expenses out-of-pocket until you reach your deductible. After you reach your deductible, your plan will cover all of the costs of your Medicare-covered services.

How can I keep track of my expenses?

You should keep any health care bills or receipts you get to make it easy to track your account usage for tax purposes. It may be helpful to keep this information in one place.

  • If you keep your deposit in the bank your plan selects, you'll get a monthly statement from your plan that lists your account activity. You can also get information on whether your expenses count toward your deductible. Depending on the plan, you may be able to view your account on the web.
  • If you move your deposit to a different bank or financial institution, you're responsible for tracking your own expenses.
Is my account taxed?

If you spend the money deposited into your MSA account on Qualified Medical Expenses, the money and any interest you get isn't taxed.

If you use the money in your account for non-qualified expenses, the money will be taxed as part of your income. It will also be subjected to an additional 50% tax penalty.

How much will I have to pay for health coverage?
  • You (or someone on your behalf) must continue to pay your monthly Part B premium.
  • Some plans may offer extra benefits for an additional premium. You don't have to buy this supplemental coverage.
  • You have to pay out-of-pocket if you use the money in your account and haven't met your deductible.
  • Providers can't charge you more than the Medicare-approved amount for Medicare-covered services.
Can I move the money my plan deposits to another bank?

Once you get your initial deposit, you may move the deposit to a savings account that’s offered through your own bank or financial institution.

When considering an alternative bank or financial institution, ask these questions:

  • Are there any custodial fees? If so, how much are they and how are they collected?
  • Is there a minimum amount that you have to keep in your account?
  • How do you withdraw money from your account? Will you get a debit card?
  • Will your account earn interest and, if so, how much?
  • Will you get a monthly statement?
What if there's money left in my account at the end of the year?

Any money left in your account at the end of the year will remain in your account. If you stay with the Medicare MSA Plan the following year, the new deposit will be added to any leftover amount.