Medicare Medical Savings Accounts (MSAs) are growing in popularity and availability nationwide. If your clients ask about one this AEP, it’s important to know how to pitch these plans and to whom.
As of July 2018, of the nearly 19 million Medicare Advantage enrollees, less than 7,000 have an MSA plan, according to CMS enrollment data. But there’s money to be made (and saved by your clients) with medical savings accounts.
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What are MSAs?
An MSA is similar to a health savings account (HSA). However, instead of your client contributing tax-free to their account, a lump sum is deposited annually into a savings account by the plan via Medicare. Members then have the flexibility to spend their balance on qualified health expenses (hospital and medical costs, dental, vision, and long-term care to name a few), or save it for future costs.
In addition to the savings account, MSA members are enrolled in a high deductible health plan, which means nothing is covered until that deductible is met. Even after a client meets their deductible, MSAs won’t cover prescription drug costs, so MSA sales are usually accompanied with a stand-alone Part D plan.
The real value of an MSA is that any money not used from that annual deposit will roll over year after year.
Who are MSAs Meant For?
An active senior looking to save for future costs who pays for only the recommended doctor’s appointments and checkups in a given year is a model MSA client.
Think: Your neighbor who is constantly on the run, meeting with friends, taking walks around their neighborhood, remembers their daily vitamin, and is constantly working in their yard. They may take a few medications, but overall their health is exemplary. This low-risk client could benefit from minimal health costs through the year and the flexibility of rolling the remainder of their balance over to the next.
Conversely, seniors with various ongoing health concerns and costs are not ideal for this plan.
Common Concerns Clients Have About MSAs
If your client’s lifestyle doesn’t resemble what’s recommended for an MSA, they’re not right for this plan. And that’s OK, because your clients have many Medicare options. But say it does, and they’re still hesitant about moving forward — here are a few ways to address the main concerns clients may have with an MSA.
The High Deductible
While it may take a while for some clients to meet the deductible, their annual deposit already cuts a chunk out of that threshold. In addition, they can use the money in their MSA to pay for costs related to Medicare Parts A and B. If they manage to maintain a care-free year without using all the money in their account, it will roll over to the following year, allowing them to accrue and save for any costs that may come up.
While their money rolls over year to year, a lump sum is deposited into their account each year by their plan via Medicare. Some beneficiaries may feel anxious that they’re in danger of spending all of it before the year is over. Remember the deductible. Once this is met, all their Medicare expenses are 100% covered until the following calendar year, when the deductible is reset and their account receives a new deposit.
Note: It’s important that you and your client discuss their current and projected health care needs and spending each year, as this may indicate whether an MSA is right for them.
The Other Parts of Medicare
MSAs cover Part A and B services — but what about the rest? It’s not unusual that a client may have prescriptions or other needs not met within these two areas. Since MSAs do not cover prescription drug costs, clients will need to purchase a stand-alone PDP to pair with their MSA. A hospital indemnity plan may also be useful in the instance of an unexpected hospital stay. This way, your clients are saving the money in their pocket, as well as their Medicare dollars for costs down the road.
But that’s not to say clients can’t use the money in their MSA to cover qualified medical expenses that aren’t Parts A or B services. They’re free to use this money however they like including dental, vision, and long-term care costs — but purchases that aren’t under Parts A or B don’t count toward their deductible.
Ultimately, an MSA is an attractive plan option for you and your client to consider together. A low-risk senior looking to save their Medicare dollars for when they need them should find this plan appealing.
Contact your account specialist at Ritter Insurance Marketing to see which MSA plans are available in your area.
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