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In the United States, a medical savings account (MSA) is an account, generally associated with self-employed individuals, in which tax-deferred deposits can be made for medical expenses. Withdrawals from the MSA are tax-free if used to pay for qualified medical expenses. The MSA must be coupled with a high-deductible health plan (HDHP). Withdrawals from MSA go toward paying the deductible expenses in a given year. MSA account funds can cover expenses related to most forms of medical care, disability, dental care, vision care, and long-term care, whether the expenses were billed through the qualifying insurance or otherwise. Image File history File links Emblem-important. ... Health care in the United States is provided by many separate legal entities. ... It has been suggested that Health Care Financing Administration be merged into this article or section. ... President Johnson signing the Medicare amendment. ... Medicaid is the US health insurance program for individuals and families with low incomes and resources. ... TRICARE is the United States militarys health plan for military personnel and their dependents. ... The United States Department of Veterans Affairs (VA) is a government-run military veteran benefit system with Cabinet-level status. ... The Indian Health Service (IHS), an agency within the U.S. Department of Health and Human Services, is responsible for providing federal health services to American Indians and Alaska Natives. ... The State Children’s Health Insurance Program (SCHIP) is a national program in the United States designed for families who earn too much money to qualify for Medicaid, yet cannot afford to buy private insurance. ... The Emergency Medical Treatment and Active Labor Act () is a United States Act of Congress passed in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act. ... The Federal Employee Health Benefit Plan is a system of managed competition though which employee benefits are provided to full-time permanent civilian employees of the United States Government. ... This article does not cite any references or sources. ... Managed care is a concept in U.S. health care. ... Medical underwriting is an insurance term referring to the use of medical or health status information in the evaluation of an applicant for coverage (typically for life or health insurance). ... In health insurance, a preferred provider organization (or PPO, sometimes referred to as a participating provider organization) is a managed care organization of medical doctors, hospitals, and other health care providers who have covenanted with an insurer or a third-party administrator to provide health care at reduced rates to... This article or section is in need of attention from an expert on the subject. ... A flexible spending account (FSA) is a tax-advantaged financial account set up through the cafeteria plan of an employer in the United States. ... This article or section is in need of attention from an expert on the subject. ... A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). ... A High Deductible Health Plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. ... Government and private health and public policy analysts have compared the health care systems of Canada and the United States. ... Single-payer health care is an American term describing the payment for doctors, hospitals and other providers for health care from a single fund. ... Universal health care refers to government mandated programs intended to ensure that all citizens, and sometimes permanent residents, of a governmental region have access to most types of health care. ...

Once the plan deductible is met in a given year, the HDHP will pay any remaining covered medical expenses in that year. If there are funds remaining in the MSA at the end of the year, the funds can either roll over for the following year or can be withdrawn as taxable income.

MSAs are somewhat different from Health Savings Accounts (HSAs), which have become the more widely available form of these accounts. The Health savings account (HSA) is the new name for the Medical savings account (MSA) plans in the United States. ...

History

The idea of the MSA appears to have come from health care analysts that were concerned about the problem of "overinsurance." They reasoned that overinsurance was raising the cost of health care expenses. They further reasoned that if patients (as opposed to third-party payers) paid their own medical expenses, then the cost of health care would decrease.^{[citation needed]}

During the early 1990s, think tanks such as the National Center for Policy Analysis and insurance companies such Golden Rule Insurance Company began to promote passage of a law that would allow for tax-free contributions to a medical savings account. Even though the US Congress was under Republican control and the MSA concept was central to the Republican Party's health care agenda, a federal MSA law failed to materialize during the 1990s. However, Congress did pass an MSA pilot as a part of the Health Insurance Portability and Accountability Act (HIPAA) in 1996. In the meantime, some states also pass MSA legislation. Missouri was the first state to do so in 1993. By 1998, 25 states had some form of MSA legislation offering a state tax break to those who open MSAs.^{[citation needed]} The National Center for Policy Analysis (NCPA) is a non-partisan, non-profit think tank that develops and promotes private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector. ... Golden Rule Insurance Company is a health insurance company based in Indianapolis, Indiana, U.S.A. It is a unit of UnitedHealth Group. ... The Congress of the United States is the legislative branch of the federal government of the United States of America. ... The Health Insurance Portability and Accountability Act (HIPAA) was enacted by the U.S. Congress in 1996. ...

The MSA for the self-employed person or business is now called an 'Archer MSA' by the Internal Revenue Service (IRS). The 'Archer MSA' term refers to the sponsor of the HIPAA amendment creating the accounts in 1996, Congressman Bill Archer of Texas. The Archer MSA is considered an IRS pilot program that must be extended by the US Treasury Department on a periodic basis. William Reynolds “Bill” Archer, Jr. ... For other uses, see Texas (disambiguation). ...

Purpose and advantages

The Archer MSA is intended to be used by self-employed individuals and small businesses with fewer than 50 employees. The plan is entirely self-directed, including its initial setup and compliance with the plan thresholds.

The plan enables a participant dual to fund a tax-exempt account for medical expenses incurred before an associated 'high deductible' insurance plan begins to cover those expenses. The individual pairs the MSA with a 'catastrophic insurance' plan, which has lower premiums than plans with lower deductibles. Look up Deductible in Wiktionary, the free dictionary. ... Catastrophic is also the term given to any song routine in the Dance Dance Revolution video game series that has a foot-rating of nine. ...

The individual deposits funds in the MSA to cover medical expenses; these deposits are exempt from income tax. Any money added to the account can roll over to another year if unused. MSAs are investment accounts, they can accumulate over the deductible level, can be used for qualified investments, and grow tax free. The MSA account may be convertible into a standard IRA savings plan after a specified age threshold is reached. The amounts contributed for medical savings do not impose a cap on standard IRA contributions.

Among the medical expenses that can be paid out of an MSA account are premiums for long-term care coverage, health care coverage paid while receiving unemployment benefits, or any form of health care continuation coverage required under any federal law. Long-term care (LTC) is a variety of services which help meet both the medical and non-medical need of people with a chronic illness or disability who cannot care for themselves for long periods of time. ...

The risk is that an MSA account holder may find that their medical expenses outstrip the contributions they can afford to make.

Source

The MSA is generally a defined trust account that is set up solely as an IRS-related, tax-exempt financial instrument for medical expense purposes. However, after a contributor attains a certain age, current IRS provisions allow this account to be maintained as a standard IRA retirement account.

Qualifications

There are very specific qualifications to be met before making any contributions and in part those are performed using a worksheet in the IRS Form 8853 instructions. Qualified medical expenses are essentially those that would qualify for the medical and dental expenses deduction. These are discussed in IRS Publication 502. Other personal conditions, such as a period of non-employment as a self-employed individual, allow the payments for the high deductible insurance policy itself to qualify to be paid from the plan.

Future of the Archer MSA Program

In 2003 the Health Savings Account (HSA) was created. Since HSAs are a more widely available version of the MSA the original program is by and large obsolete. The exception to this is the state of California where MSA contributions are deductible on a state level and HSA contributions are not. A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). ... This article is about the U.S. state. ...

Since the Archer MSA is a pilot program, it must be extended periodically by the US Treasury Department. The present extension of the program ended December 31, 2007. The US Treasury did not extend the program beyond this point, and as a result no new Archer MSA's may be opened. Current accounts can either be left open as is or converted to an HSA. The United States Department of the Treasury is a Cabinet department and the treasury of the United States government. ...

At this time there are no financial institutions opening new MSAs. This is because of the creation of the Health Savings Account (HSA) in 2003. The HSA is available to everyone who participates in a qualifying High Deductible Health Plan (HDHP), not just the self-employed or small corporations. A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). ...

See also

• Flexible spending account
• Health Reimbursement Account
• Health Savings Account

A flexible spending account (FSA) is a tax-advantaged financial account set up through the cafeteria plan of an employer in the United States. ... This article or section is in need of attention from an expert on the subject. ... A Health Savings Account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). ...

External links

• IRS Publication 969
• IRS Form 8853
• U.S. Treasury site on HSAs
• Health Decisions HSA Page HSA news, events and consumer resources. Sponsored by the insurance trade association America's Health Insurance Plans
• Health Savings Accounts vs. Health Reimbursement Accounts vs. Medical Savings Accounts vs. Flexible Spending Accounts - helpful PDF chart comparing these, but has not been updated since 2005
• Commentary/Commentaire: It's time to consider Medical Savings Accounts, David Gratzer, CMAJ, July 23, 2002; 167(2). Article in Canadian peer-reviewed medical journal arguing for MSAs. Footnotes give many links to free full-text articles arguing both sides. Gratzer is now a senior fellow at the Manhattan Institute.
• Consumer-Directed Health Care, Bloche M. G., N Engl J Med 2006; 355:1756-1759, Oct 26, 2006. Perspective
• Health Savings Accounts — The Ownership Society in Health Care, Robinson J. C., N Engl J Med 2005; 353:1199-1202, Sep 22, 2005. Perspective FREE Full Text
• Do High-Deductible Health Plans Threaten Quality of Care? Lee T. H., Zapert K., N Engl J Med 2005; 353:1202-1204, Sep 22, 2005. Perspective. FREE Full Text