MSA plans come with a high deductible health plan (HDHP) and a bank account to help pay your medical costs.
HDHPs, as you might have deduced, have a large deductible you must pay in full before receiving coverage. After you pay off the deductible, the HDHP covers all of your costs for the remainder of the year.
As stated earlier, MSA plans also come with a bank account where the plan provider deposits funds each year for your medical expenses. You can use these funds to pay on the deductible. However, the amount contributed by the plan provider is lower than the deductible.
Other important notes regarding MSA plans:
Funds contributed to MSA plans are not taxed as long as they are used for qualified medical expenses.
You cannot personally deposit more money in your MSA bank account. Once you’ve used up all the money in the account, you pay out-of-pocket until the deductible is reached.
If you have any money leftover at the end of the year, it will remain in the account for the following year.
To be in a MSA plan you have to remain enrolled in Medicare Parts A and B.
These plans typically have provider networks. They are required to cover out-of-network care, but you may pay a higher cost.
MSA plans are not allowed to include Part D prescription drug coverage. If you would like prescription drug coverage, you have to join a standalone Part D plan.
If you choose to join a Part D plan, out-of-pocket costs associated with the prescription drug plan do not count toward your MSA plan’s deductible.