Are you the proud owner of one of the last remaining federal MSAs in existence? Take a close look at your account, because the sun may be setting on your eligibility to fund it.
Federally qualified Medical Savings Accounts (MSAs) were the pilot program prior to Health Savings Accounts (HSAs). HSAs went into effect January 2004. You cannot open a new MSA, but you may be grandfathered in if you had an MSA account prior to 12/31/2007. Although similar in essence (both are tax-deferred accounts), there are some significant differences.
One reason why your health plan may no longer qualify is because carriers may not offer plans that meet the MSA criteria. Because HSAs are a more attractive option for most people, the policies written by carriers each year are generally geared to annual HSA qualifications, rather than annual MSA qualifications (as you can't establish a new one). The HSA guidelines do not meet most of the MSA guidelines. See some of the differences in the tables below.
MSA Eligibility Requirements:
- Your insurance policy:
- The deductible needs to be between $2,150 and $3,200 with the out-of-pocket not to exceed $4,300 for single coverage.
- The deductible needs to be between $4,300 and $6,450 with the out-of-pocket not to exceed $7,850 for family coverage.
- Your employment status:
- You must be an employee or the spouse of an employee of a small employer that offers group coverage, or
- You must be self employed or the spouse of a self-employed person.
- You cannot have any other coverage that is not MSA-qualified.
- You cannot be claimed as an exemption by anyone.
It is important to check your deductible at your policy renewal date to make sure you are still eligible to fund an MSA. The Treasury Department determines the criteria annually. Just because you are eligible this year does not mean you are automatically eligible next year.
If you find that you are not eligible to contribute to an MSA, you may still be able to have an HSA. Certain criteria need to be met for this type of plan as well. Contact our office and we can help determine your HSA eligibility.
It is not necessarily true that all good things must come to an end. If you can't continue to fund your MSA, hopefully you'll be eligible to open an HSA instead. And if you open that HSA with us, you'll be in great hands. After all, our motto here at American Health Value is HSAs Done Right!
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