What is a Medicare MSA Plan?

A Medicare Medical Savings Account (MSA) plan is a Medicare Advantage (MA) plan that is offered by private insurance companies. A Medicare MSA is composed of two parts, a high-deductible Medicare Advantage plan, and a trust or custodial savings account. These products were first proposed in 1997 as a part of the Balanced Budget Act. The Medicare Modernization Act made these plans permanent in 2003. However, they were not actually offered to clients until 2007 and with a very small footprint.

Just like with any Medicare Advantage product, the client will continue to pay their Part B premium but an MSA is required by law to have a $0 monthly premium. Medicare MSA plans have two moving parts that can change each plan year, the deposit, and the deductible. The deposit is designed to help offset the plan’s deductible. For example, if the plan has a $1,000 deposit and the deductible is $3,000, your client’s responsibility is $2,000. Medicare MSA plans are the only Medicare plan on the market that gives your client money. Any unused deposit amount will roll over to the next year and a new deposit will be received at the first of the year.

This is truly the only Medicare product that your client can “win” with and potentially earn money. For your Financial Advisors, this gives you an opportunity to help your client invest those excess funds into other investment vehicles to help them grow their money. The other exciting part of an MSA plan is they do not have networks; your client has access to any provider that accepts Medicare assignment. This is great news for your rural clients or clients with specialists not found in most traditional network plans. Medicare MSA plans do not cover prescription drugs, do not be discouraged, this allows your customer to pick the best prescription drug plan for their needs. Now you can offer your client two products that best fit their needs with endless cross-selling options to best fit your client’s needs.

Let us talk about the clients that you can offer these plans to, obviously, they must be Medicare-eligible and live in the plan’s service area. They must also reside in the United States for 183 days or more during the calendar year. However, your client cannot have any other coverage that would cover the MSA deductible, including benefits under an employer or union group, TRICARE, the VA (Veterans Affairs), or FEHBP (Federal Employee Benefits Health Plan). Also, they cannot be eligible for Medicaid or currently receiving Medicare hospice benefits.

Who is a likely candidate for an MSA plan?

  • Clients who want a MA plan but do not want network restrictions.
  • Clients who currently have an HSA plan that are turning 65.
  • Uninsurable Medicare Supplement clients who are facing a high rate increase.
  • Individuals with chronic illnesses that do not typically experience overnight hospital stays.

Written By: Taylor Martin

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