When most become eligible for Medicare you get access to the booklet “Medicare & You,” Most use this booklet to find a Medicare Advantage plan that would be the best choice for them.
Most people don’t even make it to the last page where you find the Medicare Medical Savings Account (MSA). This plan is not currently available in every state, but for those who have access to it, really should consider it for several reasons:
While this plan is classified as a Medicare Advantage plan it has the following benefits:
This plan is offered by Geisinger and it is very simple—there is no premium, and the only out-of-pocket payment is a $3,600 deductible. The government deposits $1,020 into your MSA, and after that everything is paid at 100%. So, the most you have to pay of your own money in a single year is $2,580.
If you do not spend the entire amount in the MSA, it rolls over into the next year and grows with interest. In my case, I’ve been on the plan since June 2012 and I have over $3,800 in my account—more than enough to cover my deductible if I have extraordinary costs this year.
The traditional Medicare program is incredibly confusing, with Parts A, B and D, each with different deductibles, copays, gaps in coverage, and absolutely no limit on out-of-pocket spending. That is why most people supplement Medicare with another policy, called “Medigap.” But these supplemental policies can be very expensive, some costing as much as $300 a month just to plug the holes in Medicare. And you have to pay that $300 every month, year in and year out whether you are using services or not.
One of the purposes of Medicare Advantage was to simplify the program, by getting rid of the distinctions between Parts A and B (Part D drug coverage is usually still a separate program) and have one unified insurance plan like almost all others for people not on Medicare. But most of the Medicare Advantage plans are almost as confusing as traditional Medicare, and nearly as expensive as Medigap.
How does it work in practice?
Most hospital or physician billing clerks will have no idea what you are talking about when you tell them you have a Medicare MSA but they will recognize the insurance company (in this case, Geisinger). They will usually take your insurance card and bill the company directly. The carrier re-prices the claim and sends out an Explanation of Benefits. The provider will then send you a bill for your portion of the payment which you pay from your MSA account. In some cases, you will need to make a payment at the time of service, in which case you again use an MSA card like a credit or debit card.
But unlike Health Savings Accounts (HSAs), which allow deposits from anyone (yourself, your employer, and even other family members) for the under-65 group, you are not allowed to deposit your own funds into a Medicare MSA. Also, if you have an HSA, perhaps one you built up while working, you may no longer contribute to it once you are on Medicare. But you are perfectly free to use that money to pay for your out-of-pocket Medicare expenses. This way you will be able to build up the balance in your Medicare MSA while using up the HSA funds.
Overall it is a beautifully-designed and easy-to-understand approach to Medicare benefits. It encourages the patient to be cautious in the use of services, while still providing a source of funds to cover out-of-pocket costs. It is disappointing that it is not more widely available, but as HSAs continue to grow in the under-65 market and the concept becomes less exotic, perhaps more insurers will get on board.