HSA vs MSA

HSA stands for Health Savings Account, while MSA stands for Medical Savings Account. These terms refer to health insurance schemes in America. Even though there are many people who are lucky enough to have some kind of health insurance, many of these people do not actually understand what health insurance options are available. Many people with insurance do not know what the difference is between a Medical Savings Account and a Health Savings Account; yet there are key differences between the two schemes.

In order to grasp the nitty-gritty of how the two health schemes work, we need to understand the idea of consumer-driven health care. Consumer-driven health care takes care of patients either under HSA or MSA, but with an insurance policy that is highly deductible. This highly deductible policy is used as protection for the patient against sudden, disastrous medical expenses. Insurance policies of this type have a considerably lower monthly premium compared to the low deductible health insurance schemes.

To start a HSA or MSA, you need to have a high deductible health insurance plan (HDHP). Once that is set up, deposits can be made by your employer on a pretax basis, into the MSA or HSA. Otherwise, if the deposits are not through your employer, then the collections will be post-tax. There are limits to the amounts that can be deposited into each account, and these limits are set by the IRS. Any amounts exceeding the limits are considered excessive, and are not tax-deductible. However, once the money has been deposited it remains in your account, and even if leave your employment and drop the HDHP, the account will remain yours.

It is important to know that there are particulars for who really qualifies for which scheme. Both HSA and MSA need a HDHP in order to open such an account, but there are two further particulars required for a MSA. Only persons, or their spouses, in the employ of a company with 50 or less workers qualify for a MSA. Alternatively, you or your spouse can be self-employed. Further still, with a MSA, you cannot receive contributions from your employer and yourself within the same year, while for a HSA, that is possible. Limits for both schemes differas well. HSA limitations are set by the IRS at a fixed amount per year, while for the MSA, it is determined by a percentage of your yearly income and your annual deductibles. A MSA does not allow you to contribute more than you earned in that year.

Summary:
HSA stands for Health Savings Account, while MSA stands for Medical Savings Account.
A MSA has two more qualifications needed than a MSA, as well as the HDHP, while HSA only needs the HDHP to open.
MSA doesn’t permit contributions from yourself and the employer in same year, while HSA allows double contributions, or even contributions from third parties.

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