Are you comparing Medicare Supplement or Medicare Advantage Plans in Raleigh or Fuquay-Varina, or throughout North Carolina? There is a type of plan that is relatively new and has been drawing interest in recent years, which you may overlook! It’s called the Medicare Savings Account.
The Medicare Savings Account, or MSA for short, is likely the least known and understood of the Medicare Advantage Plans. The MSA is technically a version of the Medicare Advantage Plan, but it also shares similarities with the Medicare Supplement Plan. However, as the knowledge and understanding of the MSA grows, more and more people are deciding that it is the best option for them. It is growing in popularity, and I believe that is because more people are taking the time to learn and understand how it works and believe it is a favorable plan for them.
Medicare MSA was first proposed as a limited demonstration program in the Balanced Budget Act of 1997. In 2003, the Medicare Modernization Act made this plan type permanent. 2007 was the first year that the MSA was actually available to Medicare beneficiaries for enrollment.
The Medicare Advantage MSA has a unique combination of features: it is the only Medicare Advantage Plan to deposit money into your account as well as give you the opportunity to grow it. The MSA also allows access to any Medicare provider, and offers enhanced tax-free expense coverage.
There are four main elements of the MSA (Medicare Savings Accounts). They are the premium, the contribution from the insurer, the deductible, and the network. Here is a brief recap of them:
Premium – Although an MSA provider can charge a monthly premium, most do not. As with all Medicare Advantage Plans, you must continue to pay your Medicare Part B premium.
Contribution from Insurer – Medicare pays a set amount of money to the insurer who then in turn deposits it into a savings account for you the participant. In 2021 that amount is either $2,000 or $3,000 depending upon plan selection.
This contribution can be used to pay for Medicare qualified expenses. In essence therefore Medicare is paying for a significant portion of your plan deductible.
Deductible – The MSA plans contain a deductible. A deductible that I see often is in the amount of $5,000 or $8,000 for 2021, again depending upon plan selection. If you incur enough Medicare-related expenses beyond the amount of the contribution from the insurer, then you pay the balance up to the total deductible before the plan takes over again. Once the deductible is met, the plan pays 100% of Medicare-approved expenses. Keep in mind here that even if you are in the out-of-pocket stage, the charges are based on Medicare approved reimbursement rates, not whatever the provider wants to charge.
Network – Unlike most Medicare Advantage Plans, which are either an HMO or PPO, you can see any provider you wish to see as long as they accept Medicare patients. This feature makes the MSA similar to a Medicare Supplement Plan, although it is technically a type of Medicare Advantage Plan.
Drug Coverage – MSA plans do not offer drug coverage, so one will have to obtain coverage through a stand-alone Prescription Drug Plan (PDP), again similar to a Medicare Supplement Plan.
Funds “Rollover” – If one has a good health year and does not need to access the funds in the savings account, they do not lose it! It rolls over to the next year, and if they remain on the plan, then the new contribution is added to the prior rollover amount.
Enrollment Considerations – Most individuals that are eligible for enrollment in an MA Plan are eligible for enrollment in an MSA. The most noted exceptions are those who have insurance under an employer, union plan, the VA, or Tricare.
Enrollment is generally for a full calendar year, and individuals can sign up when initially eligible for Medicare or during the Annual Election Period. Note that if you sign up during the year when you are initially eligible for Medicare, the contribution from the insurer will be prorated.
REASONS / STRATEGIES
Now that you understand a little more about the world of Medicare and the MSA plan, and you are trying to find the most appropriate Medicare plan, why would one consider taking advantage of it?
Here are some examples I’ve found where the MSA has proven to be a good fit.
- New to Medicare in good health – I often get presented with this question… I’m in good health, which is the best Medicare plan for me. That’s always going to be a personal decision, however the MSA may be a good fit for you here as the savings account contribution rolls over and thus if one has multiple years of good health, they can accumulate a sizable medical expense nest egg. In addition, depending upon your risk tolerance, there are investment opportunities to take advantage of.
- Experiencing high Medicare Medigap plan premiums – Medigap, or Medicare Supplement plans tend to increase annually and with age so if one has been on a Medigap plan for years and the monthly premium has increased it may be worth considering an MSA. Why? Remember that your financial exposure annually is the difference between the contribution and the deductible. Depending upon the amount of your Medigap premium you could be saving that monthly premium and only spending it if you incur care. Again, if you have a healthy year, the money you would have spent on a plan premium can be saved and accumulate in addition to the rollover of the insurer contribution.
- Frequent traveler/don’t want network – The MSA does not have a network, so one can see any provider that accepts Medicare. This can be beneficial to those not wanting to work within an HMO or PPO setting. Also, for those who travel and want to be free of network restrictions when traveling.
- Remote locale – If you are in an area of North Carolina where there are little to no Medicare Advantage plans to choose from, the MSA could be an option to provide you with the annual out of pocket max liability to protect against that financial exposure due to a significant health event and allow you to see any provider since networks are less frequent in remote areas.
As with all Medicare Advantage or Medicare Supplement decisions for those in Raleigh, or throughout all of North Carolina, evaluating the Medicare options can be challenging. That’s why we are here to help.
Our expert agents at Elite Senior Insurance understand the Medicare Savings Account, or MSA, very well, along with all other Medicare Advantage or Medicare Supplement products. At Elite Senior Insurance, we represent nearly every carrier so we can fit you with the best carrier in your specific situation.
This is complex! Don’t spend hours doing your own research. With your input we can help you evaluate all of the plan options in your area and help you make the choice that is best for you. Visit our Facebook page for more information or call your local agent to schedule an appointment.