WHAT IS A MEDICAL ADVANTAGE PLAN?
A Medical Advantage plan is an alternative to Original Medicare. Known also as Medicare Part C or MA plans, Medical Advantage plans are provided by private companies that the Federal government pays to administer Medicare benefits.
WHAT IS A MEDICAL SAVINGS ACCOUNT (MSA) PLAN?
A Medical Savings Account (MSA) plan is a type of Medical Advantage plan that combines a high-deductible health plan (HDHP) with a bank account. Medicare deposits a predetermined amount of money into the account, which is usually less than the deductible, for you to use for health care service expenses.
- MSA Plans must provide you with the same benefits, rights, and protections as Original Medicare. However, MSA plans can have different rules, restrictions, and costs.
- Some MSA Plans offer additional benefits, such as vision and hearing care.
- MSA Plans work very similar to HSA (Health Savings Accounts) that have high deductibles as well.
- Of about 19 million enrollees in Medicare Advantage, only 5,000 are in MSA programs. Medicare MSAs became available in 2007 as part of the Medicare Modernization Act of 2003.
- These accounts are intended to be used in conjunction with a high-deductible Medicare Advantage Plan.
- Medicare Advantage Plans allow more choices for your health care in order to personalize your program. You can compare the various options of the plans based on deductibles and additional benefits, such as dental or vision care.
HOW DOES A MSA PLAN WORK?
Unlike other Medicare Advantage Plans, MSA plans include both a high deductible health plan (HDHP) and a bank account to help pay your medical costs.
HDHPs have large deductibles that you must meet before receiving coverage. This means if you have a HDHP, you will pay in full for most healthcare services until you reach your deductible for the year. Afterwards, the HDHP covers all your costs for the remainder of the year.
MSA plans are associated with a bank account where your plan deposits funds once a year for your medical expenses, which can be applied toward your deductible.
- Your MSA plan chooses the bank account and the amount it contributes. This contribution is usually lower than the full deductible.
- Funds contributed to an MSA are not taxed, as long as they are used to pay for qualified medical expenses.
- Restrictions include use of the bank account. This bank account cannot have more funds deposited into it. Once the funds have been expended in the account, if you have more medical expenses throughout the year, you must pay out of pocket until you reach your deductible. However, unused funds do rollover for the following year. They are yours to keep.
- Only those medical costs that are related to Medicare Part A or Medicare Part B will count toward your deductible, leaving some out-of-pocket costs.
- Remember, you will typically have high out-of-pocket costs for your care until you reach your deductible. After reaching your deductible, your MSA plan covers 100 percent of the costs for all Medicare-covered services.
- Each year, Medicare pays a set amount of money to the insurance company that’s offering your MSA Plan in order to fund your MSA. This amount is calculated through an actuarial formula, and it may change every year. However, you will be notified of the amount, as it’s required by the Centers for Medicare & Medicaid Services.
WHAT ARE THE BENEFITS OF A MSA PLAN?
- Because MSA funds sit in a bank account, you earn interest on those funds. This is similar to the rate earned on a traditional savings account. Currently, you are not allowed to invest those funds elsewhere.
- Funds in MSAs grow tax-free as long as the funds are used for qualified medical expenses.
- Medicare gives you money each year
WHAT ARE THE COSTS OF A MSA PLAN?
- To have a MSA Plan, you still must have both Medicare Part A and Medicare Part B, and you will continue paying your Medicare Part B premium.
- Some MSA plans charge an additional premium, especially if you elect additional coverage like eye care or dental care.
- In general though, Medicare MSA enrollees generally do not pay premiums aside from what they owe for Medicare Part B.
- Those with a MSA plan have to pay out-of-pocket expenses until the annual deductible is met. This deductible will vary based on plan.
CAN A MSA PLAN COVER PRESCRIPTION DRUGS?
- MSA plans cannot offer Part D coverage. To receive coverage for your prescription drugs, you must join a stand-alone Part D plan.
WHEN CAN I ENROLL IN A MSA PLAN?
- You can enroll in a MSA Plan when you first sign up for Part B
- You can enroll in a MSA Plan during the Fall Open Enrollment Period, which takes place every year.
WHAT ARE THE RESTRICTIONS OF A MSA PLAN?
You cannot have a MSA Plan if you have any other type of health insurance, including:
- Veterans Affairs benefits
- Federal Employee Health Benefits
- Other kinds of employer or retiree insurance that would pay during your MSA deductible.
DO MSA PLANS HAVE PROVIDER NETWORKS?
Some MSA plans may have provider networks, which would mean you would most likely pay less for your care when using these in-network providers or facilities.
All MSA plans are required to cover out-of-network care, but these costs would be higher than care from an in-network provider.
WHO BENEFITS THE MOST FROM MSA PLANS?
- MSA Plans are great for people who are reasonably healthy and only go to the doctor a few times a year.
Enrollment numbers remain low because people are so used to traditional medical insurance programs, and if the individual is not familiar with HSAs through employers, these can be tough to sell. People go with what’s comfortable.
However, President Trump has proposed changes to MSA Plans to make them more attractive to the consumer. The changes would include:
- Allowing you to make tax deductible contributions to Medical Savings Accounts
- You would also have a one-time opportunity to roll over funds from your HSAs to your MSAs.
- You would not be allowed to buy Medigap or other supplemental coverage.
Medicare MSA plans are not available everywhere. An expert in Medicare Advantage Plans and MSA plans can help. MedicareGo Directory in St. Louis helps individuals choose which Medicare Advantage plan is right for them, including MSA Plans. We’ll explain all the options in Medicare Advantage Plans, the differences between them, and what we recommend for you. We’ll answer all your questions and evaluate your unique circumstances and health conditions to offer advice. Get the right coverage for you. Contact us today!