Medical Savings Account (MSA) Plan Information
What is a Medical Savings Account (MSA)?
Who is eligible to have an MSA?
What is a “small employer” for MSA purposes?
How can someone establish an MSA?
What is a Medical Savings Account (MSA)?
An MSA is a tax-exempt trust or custodial account established for the purpose of paying medical expenses in conjunction with a high-deductible health plan. A number of the rules that apply to MSA are similar to rules that apply to individual, and is “portable”. Thus, if the individual is an employee who later changes employers or leaves the work force, the MSA does not stay behind with the former employer, but stays with the individual. However, because MSAs differ from IRAs in some important respects, taxpayers cannot use an IRA as an MSA, and cannot combine and IRA and an MSA in a single account. For more information or to establish an MSA account go to: www.MSABank.com
Who is eligible to have an MSA?
Two types of individuals are eligible to establish an MSA: an employee (or spouse of an employee) of a “small employer” that maintains an individual or family “high-deductible health plan” covering that individual (employee or spouse); or a self-employed person (or spouse of an employee) of a “small employer” that maintains an individual or family “high-deductible health plan” covering that individual (self-employed person or spouse).
What is a “small employer” for MSA purposes?
An employer is a “small employer” for a calendar year if the employer employed an average of 50 or fewer employees on business days during either of the two preceding calendar years. Special rules apply to new employers, consolidated groups, and certain employers that have added employees.
How can someone establish an MSA?
Beginning January 1, 1997, any eligible individual can establish an MSA with a qualified MSA trustee or custodian, in much the same way that individuals establish IRAs with qualified IRA trustees or custodians. No permission or authorization from the Internal Revenue Service (IRS) is necessary to establish an MSA. Remember, that the “account” is where you deposit money to be used for medical expenses. To get an MSA compatible health insurance plan, click here for a health insurance quote and sort for MSA plans.
To set up an MSA account (not the health plan) go to: www.MSABank.com. An expert at Professional Benefits & Insurance Services, sponsors of BenefitsCafe.com, can also help you get information on the MSA accounts. Call us at 800-746-0045.