Can I get a Medicare Supplement plan if I have a Medicare Medical Savings Account (MSA)?

Mike Olmos by Mike Olmos | Licensed since 2010
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This article was updated on: 09/16/2018

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In a word: no. You can’t buy a Medicare Supplement (Medigap) plan if you have a Medicare Medical Savings Account (MSA). However, if you had a Medicare Supplement plan before you signed-up for your Medicare MSA, you may keep your Medicare Supplement plan. If you do so, you will need to continue paying your monthly premium for your Medicare Supplement plan.

Be aware, though, you won’t be able to use the Medicare Supplement plan to pay medical expenses up to the Medicare MSA’s yearly deductible. While a Medicare Supplement plan and a Medicare MSA may each provide benefits to help you pay for covered services not paid by Medicare Part A and Part B, they are not designed to work together.

How does a Medicare MSA work?

If you’re enrolled in a Medicare Medical Savings Account (MSA), you probably know that it’s a special type of Medicare Advantage plan. Medicare Advantage plans give you an alternative way to get your Medicare Part A and Part B benefits. Just like other types of Medicare Advantage plans, Medicare MSAs are offered by Medicare-approved private insurance companies and are required to provide at least the same benefits as Medicare Part A (hospital insurance) and Part B (medical insurance), with the exception of hospice care, which is covered by Medicare Part A.

Unlike other types of Medicare Advantage plans, a Medicare MSA consists of two parts:

  • A savings account
  • A high-deductible health insurance plan

It’s up to you to manage the savings account part of a Medicare MSA plan. However, the account is funded with money from Medicare. The Medicare MSA plan deposits the money it receives from Medicare into a savings account in a specific bank at the beginning of each year. The amount may vary. You are responsible for paying 100% of the Medicare-covered portion of your health-care costs until you reach the plan’s deductible.

You may make tax-free withdrawals from the account to help pay qualified medical expenses, as defined by the Internal Revenue Service (IRS). Qualified medical expenses may include your costs for services covered by Medicare Part A and Part B as well as some other health-care expenses. Funds in your savings account may earn tax-free interest and any balance in the savings account carries over from year to year. You may not deposit your own money into a Medicare MSA savings account.

You don’t pay a monthly premium for your Medicare MSA plan. You continue to pay your Medicare Part B premium.

Typically, Medicare MSA plans:

  1. Cover your Medicare Part A and Part B out-of-pocket costs before you reach the Part A and Part B deductible amounts.
  2. Have a high annual deductible. The plan deductible is a specified, fixed dollar amount per year.  The plan deductible may be more than the amount that your plan deposits into your savings account.  In this situation, you may have to pay out-of-pocket Medicare costs until you reach the MSA plan deductible amount.
  3. Pay 100% of the cost for covered Medicare services if and when you meet the MSA plan deductible. Savings account withdrawals used to pay for services covered by the plan count toward the deductible. You may use the funds for other qualified medical expenses, but those amounts will not apply to the deductible.
  4. Let you see any provider who accepts Medicare assignment.
  5. Do not include prescription drug coverage. However, you may enroll in a stand-alone Medicare Part D Prescription Drug Plan to help pay the cost of your medications.

If you decide to leave your Medicare MSA plan, you can do so during the Annual Election Period (October 15 – December 7 each year). You may also be able to leave your MSA plan under special circumstances, like moving out of the plan’s service area.

Another opportunity you may have to leave your MSA plan, if you prefer, is to sign up for a new Medicare Advantage plan at the end of the year.

If you disenroll from a Medicare MSA before the end of the year, you may have to pay a portion of the deposit back to Medicare.

How does a Medicare Supplement plan work?

Medicare Supplement –also called Medigap– plans are offered by private insurance companies to help fill the “gaps” left by the federal government-sponsored Medicare program, such as copayments, coinsurance and deductibles. Medicare Supplement plans are designed to work alongside Medicare Part A and Part B. In fact, Medicare Supplement plans don’t cover medical costs associated with any kind of health plan other than Medicare Part A and Part B, so they don’t work with Medicare Advantage plans, including Medicare MSA plans.

If you’re interested in a Medicare Supplement plan, you might want to purchase it during the Medigap Open Enrollment Period, which is the 6-month period when you are both age 65 or older and enrolled in Medicare Part B. During this time, you have a Medicare Supplement right to “guarantee issue.” This means the insurance company cannot turn down your application, or charge you a higher premium, because of your health condition. Medicare Supplement plans also have a renewal guarantee, which means that in most cases you can renew your Medicare Supplemental plan each year. If you cancel your Medicare Supplement plan, however, you might not be able to get it back later.

Medicare Supplement plans are standardized and in most states there can be up to 10 plans, labeled by letters of the alphabet (for example, Medicare Supplement Plan G). Each plan type covers the same standard benefits as other plans of the same label, no matter which insurance company is offering it. You can compare the plan types by entering your zip code where indicated on this page. Medicare Supplement plans sold after 2006 do not include prescription drug coverage.

In addition to paying your Medicare Part B premium, you need to pay the premium for your Medicare Supplement plan. The cost of Medicare Supplement plans can vary even for the same plan type; for example, the premium for Medicare Supplement Plan G might be different depending on which company you buy it from. Therefore, it may be a good idea to shop for the best price for the coverage that meets your needs.

If you decide you want to enroll in a Medicare Supplement plan and you are presently enrolled in a Medicare MSA plan, you can drop the MSA plan, switch back to Medicare Part A and Part B, and then apply for a Medicare Supplement plan; see the previous section for details about dropping an MSA plan.

Medicare MSA plans and Medicare Supplement plans are among a number of coverage options that may be available to Medicare beneficiaries. Benefits and costs vary, so it is important to understand the plan you choose and how it will meet your individual health-care needs.

If you would like more information about Medicare Supplement plans or Medicare Advantage plans, including Medicare MSA plans, I can help you. Feel free to schedule a phone call with me or have me email information to you using the links below.  You can also compare plans right now by using the Find Plans or Compare Plans button on this page.

The product and service descriptions, if any, provided on these Medicare.com Web pages are not intended to constitute offers to sell or solicitations in connection with any product or service. All products are not available in all areas and are subject to applicable laws, rules, and regulations.

The purpose of this communication is the solicitation of insurance.  Contact will be made by an insurance agent/producer or insurance company.

Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the Federal Medicare program.

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