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Medicare Advantage Medical Savings Accounts (MSAs)

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Discover the benefits of an MSA and how it works.

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Eligibility 

A Medicare Advantage MSA Plan has two parts.

  1. A qualifying high-deductible health plan: You must be enrolled in a qualifying high-deductible Medicare Plan.
  2. Medicare Advantage Medical Savings Account (MSA): You must open an MSA through your health plan provider. Your provider will then open your account with Optum Bank, Member FDIC. Your health plan provider will then deposit money into your account.

Who can get an MSA? Most people with Medicare Part A and Part B can join a Medicare Advantage MSA Plan. However, you cannot join if you:

  • Are eligible for Medicaid
  • Currently receive hospice care
  • Live outside of the United States more than 183 days per year
  • Have TRICARE or Department of Veterans Affairs benefits
  • Have health coverage that would cover the Medicare Advantage MSA Plan deductible, including benefits from an employer or union retiree plan
  • Are a retired employee of the federal government and are in the federal employee health benefits program (FEHBP)
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How it works

  1. Join: Enroll in a qualifying high-deductible Medicare Advantage MSA Plan.
  2. Set up your MSA: Next, you’ll select your health plan provider and the provider will open your account with Optum Bank®.
  3. Get your money: Medicare will deposit a certain amount of money each year for your health care.
  4. Use: Once money is deposited, you can use it to pay for your qualified medical expenses, including costs not covered by Medicare. Money in your MSA cannot be used for qualified medical expenses of any other person, including a spouse.
  5. Pay your deductible: If you use all of your MSA funds, then you’ll pay out-of-pocket until you reach your deductible. After reaching your deductible, your plan then pays Medicare-covered services.
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Tax benefits

  • Qualified medical expenses: Use MSA funds to pay for your qualified medical expenses, like doctor’s visits.
  • Tax-free money: Your MSA money isn’t taxable as long as it’s used for your qualified medical expenses.
  • Tax-free interest: Interest earned on MSA money isn’t taxable if it’s used for your qualified medical expenses.
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Health savings accounts (HSAs) are offered or administered by Optum Bank®, Member FDIC, or ConnectYourCare, LLC, each a subsidiary of Optum Financial. HSAs are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply. Fees may reduce earnings on account. Flexible spending accounts/arrangements (FSAs), health reimbursement arrangements (HRAs), Commuter and Parking Benefits, Adoption Reimbursement Plans, Tuitions Reimbursement Plans, Surrogacy Reimbursement Plans, Lifestyle Plans, COBRA Benefits, and all other account types are administered on behalf of your plan sponsor by Optum Financial, Inc. or ConnectYourCare, LLC (collectively, “Optum Financial”) and are subject to eligibility and restrictions. Please contact a legal or tax professional for advice on eligibility, tax treatment, and restrictions. Please contact your plan administrator with questions about enrollment or plan restrictions. Federal and state laws and regulations and the design of your plan are subject to change.

Self-directed mutual fund investment options are made available through the services of an independent investment advisor, or your plan sponsor. Discretionary advisory services are provided by Betterment LLC, an SEC-registered investment adviser, with associated brokerage transactions provided by Betterment Securities, member FINRA/SIPC. For details and disclosures visit betterment.com. Certain brokerage services are offered through TD Ameritrade, Inc., member FDIC/SIPC and a subsidiary of The Charles Schwab Corporation.  For details and disclosures, visit  www.tdameritrade.com. The Schwab Health Savings Brokerage Account is offered through Charles Schwab & Co., Inc., member FINRA/SIPC. For details and disclosures, visit schwab.com.

Orders are accepted to effect transactions in securities only as an accommodation to HSA owners. Optum Financial and its subsidiaries are not broker-dealers or registered investment advisors and do not provide investment advice or research concerning securities, make recommendations concerning securities, or otherwise solicit securities transactions.

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