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What Is an MSA Insurance Policy?

The Medicare health insurance system offers several coverage options for seniors, one of which is the medical savings account, or MSA plan. These plans consist of a savings account and an insurance policy, both of which work together to cover health care-related expenses. MSA plan can come in handy in cases where unexpected health care costs occur.

  1. Medicare Advantage Plans

    • Medicare Advantage plans falls within Medicare's Part C coverage options. These plans are offered through private insurance companies and provide the same benefit coverages as Parts A and B. Advantage plans can vary in terms of benefit coverage and deductible requirements so several plan options are available. MSA insurance policies are one of the plan options offered under Medicare Advantage. These plans consist of a savings account and a high deductible health insurance policy. The two parts of an MSA insurance policy work together to reduce a person's overall out-of-pocket costs.

    MSA Insurance Policy

    • An MSA insurance policy carries a high deductible requirement, meaning a person has to pay the deductible amount in out-of-pocket costs before the actual benefit coverages kick in. To help counter the high deductible, participants don't pay a monthly premium amount. So, anytime a person goes to the doctor, she has to pay out-of-pocket until the deductible requirement is met. Any out-of-pocket costs must go toward Medicare-covered services for them to count toward the plan's deductible requirement. Any services covered under Parts A and B are considered Medicare-covered services.

    Medical Savings Account

    • A Medicare medical savings account works as a backup to the insurance policy part of an MSA plan. In effect, the money from the medical savings account is used to cover the out-of-pocket costs required by the high deductible policy. Medicare deposits money into this account on an annual basis. The amount deposited equals the difference between the cost of a standard Medicare plan vs. the cost a high deductible plan. The Medicare Advantage plan chooses which banks recipients can choose for their medical savings accounts. Any deposits to the account can only come from Medicare and any withdrawals made must go toward medical costs.

    Conditions

    • Medicare participants must enroll in Medicare Parts A and B to qualify for an MSA insurance plan. Participants are still required to pay their monthly Part B premium amounts while enrolled in an MSA plan. Persons who have other types of health insurance that already cover out-of-pocket costs cannot qualify for an MSA plan. Medicaid recipients and people who receive veterans' benefits are also ineligible. MSA plan participants are not restricted in terms of which health care providers they choose; however, the terms of a Medicare Advantage plan may only cover certain services.

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