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Medical Savings Accounts Medical savings accounts, also known as MSAs, are tax-deferred accounts in which money is saved for medical expenses. The way it works is simple. The employer or individual (if self-employed) takes a portion of the money typically spent on health coverage and deposits it into an MSA. The remaining portion of the funds is used to purchase a cheaper high deductible health plan. Breaking Down Medical Savings Accounts The funds placed within a take care medical savings account are only to be used for certain medical expenses. The range of medical purposes for which this money can be used is incredibly broad. Additionally, any money placed into an MSA stays in the account even if there is some left over at the end of the fiscal year. Typically, individuals whose companies offer them health insurance do not have to pay taxes on it. On the other hand, if they need to get health insurance on their own, they must pay taxes. In essence, medical savings accounts were introduced as a way to level the world of health insurance. They do so by giving self-employed individuals and uninsured workers a similar tax break as those who work for larger corporations. As attractive as medical savings accounts may be, newer health savings accounts are now becoming a more appealing choice. First of all, as of 2005, MSAs have a ceiling of 1,722 dollars for individuals and 3,937 dollars for families. HSAs have a higher limit of 2,650 dollars for individuals and 5,250 dollars for families. Additionally, any individual over 65 can participate in HSAs, while medical savings accounts are limited to small businesses or people who are self-employed. Take care offers HSA options that can work for many. |
Additional Topics Consumer-Directed Health Plans Consumer-Driven Health Accounts Dependent Care Flexible Spending Accounts Flexible Health Spending Accounts Flexible Medical Expense Accounts Health Care Flexible Spending Accounts Health Reimbursement Arrangements IRS Section 125 Cafeteria Plans Medical Expenses and Income Tax Plan for Medical that Health Insurance Doesn't Cover Save 25% to 40% on Health Expenses Save on Co-Pays and Over-the-Counter Medications Save on LASIK and Orthodontic Costs Section 125 Plan Administration |
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