CMS Pub. 100-16, ch. 1, § 20.3

The BBA authorized MSA plans on a demonstration basis when it created the M+C

program. The MMA of 2003 made Medicare MSAs a permanent type of MA plan

option and extended the beneficiary protection from balance billing by non-contracting

providers to include MSA enrollees (42 U.S.C. § 1395w-28(b)(3)(A); 42 CFR 422.4(a)).

An MSA has two parts: 1) A high deductible MA plan and 2) a Medical Savings account

(42 CFR 422.4(a)(2)).

1. In a high deductible MA plan:

a. Enrollees pay no premiums to the MSA plan except as required to cover

supplemental benefits (42 CFR 422.262(b)(2));

b. Enrollees pay out of pocket for all services until they reach the deductible amount

(42 CFR 422.103(a); 42 U.S.C. § 1395w-28(b)(3)(A)(i)); and

c. The MSA plan pays for all Medicare covered services, after the high-plan

deductible is met (42 CFR 422.103(c); 42 U.S.C. § 1395w-28(b)(3)(A)(iii)).

2. Medical Savings Account: The organization offering the MSA plan deposits money

into a special savings account at the beginning of each calendar year. Only the plan

can make deposits into the MSA account; plan enrollees cannot deposit their own

money. The amount of deposit can change each year and may also earn interest. Any

money left in the account at the end of the year will remain in the account and will be

added to the new deposit the following year if the enrollee choses to continue

enrollment.

Enrollees are responsible for handling the money in their account, including

deciding whether to pay for health care services using medical savings account

funds or other funds.

An MSA plan:

• Must, after the enrollee has met the plan deductible, cover in full all original

Medicare Part A and B services subject to the requirements at 42 CFR 422.101 and

section 1852(a)(1). (See also section 1859(b)(3) of the Act and 42 CFR 422.103(a));

• May offer supplemental benefits but may not apply the patient portion of the cost of

those services to the patient’s deductible (Section 1859(a)(3)(B)(ii)); and

• May not offer a Part D benefit. However, plan enrollees may choose to

simultaneously enroll in a Prescription Drug Plan (PDP) (42 CFR 422.4(c)(1)–(2)).

MSA plans must meet all other requirements of MA plans.

For further information on MSA plans including special tax requirements

see: https://www.medicare.gov/Pubs/pdf/11206.pdf