Imagine clients being able to use their Medicare policy to plan for future costs that aren’t relevant right now.
Your clients have some options on how to make their money work for their health care and rollover when they don’t need it.
Let’s Start with the HSA
A health savings account (HSA) is an increasingly popular method for Americans to save money for current and future health care costs. In 2016, more than 20 million consumers participated in an HSA plan.
HSAs have a triple-tax benefit, which allows clients to save money on a tax deductible or pre-tax basis, with tax-free contributions and withdrawals. Clients can contribute and save up to $3,450 on their own plan annually, or $6,900 with their family in 2018. Those over 55 can save an additional $1,000 per year.
Used in conjunction with high-deductible health plans, the money in an HSA can be used for an array of items, including deductibles, copays, coinsurance, and prescriptions, among other things. The most appealing part for consumers is the balance rolls over year to year if they don’t use it, so they can continue to save for costs down the road.
There’s only one problem: Once enrolled in Medicare, beneficiaries can no longer contribute to their HSA.
Sounds great, right? Why not add one for every client? There’s only one problem: Once enrolled in Medicare, beneficiaries can no longer contribute to their HSA.
Seniors Are in Luck
Medicare Medical Savings Accounts (MSAs) are the natural transition for Medicare enrollees. With a Medicare MSA, Medicare contributes a tax-free set amount (which is subject to change) each year. These accounts pair with high-deductible health plans and don’t contain Part D prescription drug coverage.
Medicare MSAs are ideal for seniors in fairly good health who don’t have many medical costs. Health insurance professional Jim Handlan says, “An exemplary MSA member budgets a portion of each MSA deposit for preventive health and invests the remainder for future health and well-being needs.”
Along with a new deposit to the MSA, any money not spent through the plan year rolls over to the next, just like an HSA.
Clients enrolled in MSAs do not have any premiums aside from their Part B premium, but clients must pay all approved costs out of pocket until they hit their deductible. Along with a new deposit to the MSA, any money not spent through the plan year rolls over to the next, just like an HSA.
What Should T65 Clients Do With Their HSA?
While clients can’t contribute to their HSA once they’re enrolled in Medicare, there are a few options in making that money work through their Medicare years.
They can continue to use their HSA money to cover ongoing medical costs, or they can pay out of pocket upfront to allow their balance to build over time.
As the flexibility of HSAs becomes increasingly popular for working Americans, we expect the Medicare MSA to become more popular for Medicare beneficiaries.
Your clients will expect you to be familiar with Medicare MSAs and want to know if they have the option to enroll in their area. As Medicare MSAs become more commonplace, talk to your account specialist now about plans available near you.