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Overview MSA’s are a great idea that have yet to gain wide acceptance. As part of the Kennedy-Kassenbaum health reform bill,
MSA's were introduced in January of 1997. The IRS was set to cut off the issuance of MSA's at 750,000 plans in October. With less than 250,000 plans created in 1997 and the market failure of MSA's in the
group market, it is likely that MSA's will not be capped during this four year test program. House Ways and Means Committe Chariman Bill Archer of Texas, introduced a bill in Congress in Feb '98 that would make MSA's
available to an estimated 2.5 million federal employees. This may be the psychological shot-in-the-arm to bring this valuable tool to the forfront of health options. We at Castle Group Health believe that
MSA’s are a "must consider" for family health plans.
Advantages of an MSA
Tax Savings |
You can deduct MSA contributions from your adjusted gross income on your federal tax returneven if you don’t itemize deductions. |
Interest Earned |
Dollars left in your account will grow with tax deferred interest earnings. |
Reduced Insurance premiums |
When you change from a low-deductible health plan to a high-deductiuble health plan, your insurance premiums are usually 20-50% lower. You can use these
savings to fund your MSA. |
What is a Medical Savings Plan?
- An individual savings account that you can use to cover your health care expenses.
- The funds that are controlled by you, the account holder.
- It is portable: the funds remain with you regardless of employment.
- Money not spent each year remains in the account for use in subsequent years.
The result? You Save on Health Insurance Premiums. For a federally qualified plan you must purchase and maintain a high deductible insurance policy.
Coverage |
Annual DeductibleNo more than No less than |
Total out-of pocket expenses (no more than ) |
Single |
$ 1,500 $ 2,250 |
$ 3,000 |
Family |
$ 3,000 $ 4,500 |
$ 5,500 |
Coverage |
Maximum
Deductible |
Maximum MSA Percentage |
Maximum Yearly MSA Contribution |
Single |
$ 1,500 |
65% |
$ 1,462 |
Family |
$ 3,000 |
75% |
$ 3,375 |
When you obtain a qualified MSA eligible medical plan you make a tax deductible deposit into an interest bearing MSA account. This account is held
by a trustee who may charge $25 to $50 per year maintenance. The trustee issues you a checkbook and/or Debit (Visa-Mastercard) Card. When you have eligible medical expenses that are not covered by your medical plan you
pay for them with your trustee account. A 15% penalty would apply to funds withdrawn from the savings account, prior to age 65, and used for non-medical purposes, except in the case of death or disability.
We represent a couple of different carriers offering MSA's. Submit a quote request to learn more. |
