Imagine helping your clients leverage their Medicare policy to prepare for future health care expenses—costs they may not face today but could encounter down the road.
Medicare Savings Accounts (MSAs) offer clients a flexible way to make their funds work for their health care needs while also allowing unused balances to roll over from year to year. Let’s explore how this option can benefit your clients and help them plan for the future.
Starting with HSAs
Health Savings Accounts (HSAs) have become a popular way for Americans to save for current and future health care expenses. As of 2023, over 70 million people participated in HSA plans.
HSAs offer a powerful triple-tax benefit: contributions are tax-deductible or made on a pre-tax basis, and both the growth and withdrawals are tax-free when used for eligible expenses. In 2025, individuals can contribute up to $4,300 annually to their HSA, while families can save up to $8,550. Those aged 55 and older can add an extra $1,000 to their annual contributions.
Paired with high-deductible health plans (HDHPs), HSAs can be used to cover a variety of medical expenses, such as deductibles, copays, coinsurance, prescriptions, and more. One of the most attractive features for consumers is that unused balances roll over year after year, allowing them to build a robust financial cushion for future health care costs.
But there’s a catch: once a client enrolls in Medicare, they are no longer allowed to contribute to their HSA.
While HSAs are an excellent tool for saving, this restriction presents a challenge for clients transitioning to Medicare. What’s the solution? That’s where Medicare Savings Accounts (MSAs) come in.
Good News for Seniors: Medicare MSAs
Medicare Medical Savings Accounts (MSAs) offer a seamless transition for Medicare enrollees who previously utilized Health Savings Accounts (HSAs). With an MSA, Medicare makes an annual tax-free contribution to the account (amounts are subject to change). These accounts are paired with high-deductible health plans but do not include Part D prescription drug coverage.
MSAs are particularly well-suited for seniors in good health with minimal medical expenses. Health insurance expert Jim Handlan explains, “An ideal MSA member allocates a portion of each deposit for preventive care and invests the remainder for future health and well-being needs.”
One of the biggest advantages of MSAs is their rollover feature. Any unused funds at the end of the year carry over to the next, allowing clients to build a savings reserve for future health care costs—just like an HSA.
Clients enrolled in MSAs do not pay premiums for the account itself, aside from their standard Part B premium. However, they must cover all approved medical expenses out of pocket until meeting their deductible. This combination of flexibility and savings potential makes MSAs an appealing choice for certain Medicare enrollees.
What Can T65 Clients Do With Their HSA Funds?
Although clients can no longer contribute to their HSA after enrolling in Medicare, they still have options for making the most of their savings during their Medicare years.
Clients can choose to use their HSA funds to cover ongoing medical expenses, such as copays, deductibles, or other out-of-pocket costs. Alternatively, they can pay for medical costs out of pocket and allow their HSA balance to grow over time, creating a larger reserve for future health care needs. Both strategies offer flexibility and ensure the funds are put to good use.
The Bottom Line
As HSAs continue to grow in popularity among working Americans for their flexibility and tax advantages, Medicare MSAs are poised to gain traction among Medicare beneficiaries.
Your clients will likely look to you for guidance on Medicare MSAs and whether they’re available in their area. As these plans become more widely known, now is the perfect time to connect with your sales specialist to explore the options available near you. Stay ahead of the curve and be ready to provide the insights your clients need.
Not affiliated with or endorsed by Medicare or any government agency.
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