MORE ABOUT MSA

The concept behind Medical Savings Accounts is that when you spend your own money, you spend it wisely, thus saving money for yourself and for the insurance company. This is a win win situation. You get a high deductible major medical policy and a Medical Savings Account, or MSA.

The higher the deductible, the amount you pay before the insurance kicks in, the lower the premium. Two protections are built into the program. First there is one deductible for the whole family, rather than for each individual. Unlike traditional health insurance, where you must pay the deductible for each person before the insurance starts to pay for their expenses, with our MSA, the deductible is cumulative for all family members. If one person has a medical expense that causes the entire deductible to be paid for the year, there is no further deductible to pay for anyone. For example, rather than having $1000 deductible for each person in a family of four, which adds up to $4000, you can choose a family deductible of $3050.

Secondly there is a special rider which gives you 16 months to build up the money in your savings account pays a portion of the deductible during that time. If you choose to invest one twelfth of the allowed amount into your MSA monthly, or $190.63 in the above example, it will take 16 months to build the account to $3050. If you then have a medical expense in the first month that is $4000, you would use the $190.63 in your MSA, and the insurance company would pay the remaining $2859.39 of the deductible for you. Then the insurance would pay the remaining $1000 and other applicable bills for the year.

I f the above scenario occurred in your second month, you would use the $381.26 in your MSA. The company would pay the remaining $2668.74 plus $1000. The purpose of this rider is to protect you against large expenses before you have had a chance to build up your MSA.

The Medical Savings Account is money that you invest in a special account. All the money you deposit in the account up to the government authorized maximum is 100% tax deductible. Figuring the possible tax savings, this can give you up to an 8.8% gain on your MSA. While growing in your account, your money is available without penalty for any medical expense you incur. Besides being used to pay the deductible, it can be used for anything not covered by the major medical insurance, including dental, acupuncture, naturopathy, taxi fare to a doctor's office, almost any imaginable medical expense. The key is that this is your money, and as it accumulates, it stays in your account from year to year. It is the only health insurance plan we know of where you get to keep part of the money you pay the company during the year. What a bonus!

The following chart shows the allowable deductibles and MSA Deposits:

You may put as much or as little money as you wish into your Medical Savings Account. However the amounts shown are the tax deductible maximums. You may put the money in monthly, all at once, or whenever you can. You are not required to put anything into the account. Additionally, 60% of your major medical premium dollars are deductible.

Current law penalizes you if you use MSA funds for non-medical expenses before age 65. Then it becomes a retirement account that you may use without penalty for anything you choose. There is also a movement toward extending the MSA program so that it can be used as a supplement to Medicare.

The system is very easy to use. The MSA and the Roth IRA are the two best deals the congress has given us! To take advantage of the MSA, just call Nancy, 928-777-8736, or Ron, 928-717-8256, or E-mail us at answers@weareinsurance.com.

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