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                    Medical Savings Account (MSA) Health Insurance
                    just got better. New and Improved, it is now an
by Emily Harding

The old Medical Savings Account (MSA) Health Insurance has been referred to as an "IRA for health insurance". Qualified MSA plans feature catastrophic insurance coverage with deductibles starting at $1550 for an individual and $3100 for a family. The family deductible is an aggregate deductible where all members of the family's expenses can go towards meeting the deductible. However, if just one person gets  the entire family deductible needs to be satisfied before benefits are  payable under the base plan.

 In addition to the deductible, there is coinsurance that the insured is  responsible for on the next $2000 of expenses. Generally this is either 50% or 20% that the insured pays. After the insured pays this coinsurance the insurance company pays 100%. There is a maximum of 2 coinsurances  in a family plan. Typically the total out of pocket exposure  in a family MSA  plan would not exceed $5000 including the deductible.

The IRA-like component of the Medical Savings Account Plan is a separate  savings account administered by either the insurance company or other  financial institution that expressly handles Medical Savings Accounts. In addition to paying the monthly premiums for the insurance plan, the insured may make voluntary tax deductible contributions into the MSA account up to a maximum of 65% per year of the individual deductible or 75% of the  family deductible. The MSA account can be used to save to cover the insured's out of pocket costs for insurance eligible expenses as well as other medically related expenses that are not insurance eligible such as dental, eye care, eye glasses, alternative medical treatment, travel for medical special education and more!

Unlike an FSA or flexible spending account available through some employers  MSA contributions are not forfeited if they aren't used up by the end of the  year. They compound and grow tax FREE and withdrawals for medical  related expenses are also tax FREE. The only time there is a tax consequense  with an MSA is  when the monies are withdrawn and used for non-medical
related expenses at which time a 15% penalty is due. In addition, the withdrawal is  taxed as income for that year.

Thoretically MSA health insurance plans are supposed to offer dramatic savings in health insurance premiums in return for the insured taking on the  responsibility for their own medical expenses in the beginning (until their deductible is met). Unfortunately the plans currently available to Rhode Island individuals and groups aren't priced well enough in our opinion to warrant taking on so much exposure. Many low deductible plans priced well below what available MSA plans are priced at are available and make much better financial sense. If you are considering an MSA, contact Health Plan Specialists  today for an MSA quote to see why the plans currently available may or may not be worth applying for.