Certainly, let's compare the differences between a Health Savings Account (HSA) and a Medical Savings Account (MSA) in a table:
| Aspect | Health Savings Account (HSA) | Medical Savings Account (MSA) |
|---|---|---|
| Primary Purpose | Designed for individuals covered by a High Deductible Health Plan (HDHP) to save and pay for qualified medical expenses tax-free. | Created to help self-employed individuals and small business owners with HDHPs save for medical expenses tax-free. |
| Eligibility | Individuals must have an HDHP to open an HSA, and not be covered by other non-HDHP health insurance or Medicare. | Targeted toward self-employed individuals and small businesses with HDHPs, though eligibility criteria may vary by state. |
| Account Ownership | Can be opened by individuals with an HDHP, and employers can also contribute to their employees' HSAs. | Typically owned by the account holder, with contributions coming from the individual and potentially their employer. |
| Contribution Limits | Annual contribution limits set by the IRS; contributions may be made by the account holder or their employer. | Annual contribution limits established by the IRS or state regulatory agencies, depending on the type of MSA. |
| Tax Benefits | Contributions are tax-deductible, and funds grow tax-free if used for qualified medical expenses. Withdrawals for non-qualified expenses may be subject to taxes and penalties. | Contributions are tax-deductible, and earnings grow tax-free if used for qualified medical expenses. Non-qualified withdrawals may be subject to taxes and penalties. |
| Portability | HSAs are highly portable and can be transferred to a new employer or retained when switching health plans. | MSAs may be less portable, with the ability to transfer varying by state regulations and account type. |
| Qualified Medical Expenses | Funds may be used for a wide range of qualified medical expenses, including deductibles, copayments, prescriptions, and some over-the-counter items. | Generally used for qualified medical expenses, though definitions may vary by state and account type. |
| Investment Options | Many HSAs offer investment options, allowing account holders to grow their savings through stocks, bonds, or mutual funds. | MSAs may offer investment options depending on the specific type of MSA, but options may be more limited than HSAs. |
| Rollover of Funds | Unused HSA funds roll over from year to year and can continue to grow tax-free. There is no "use it or lose it" rule. | MSAs may have a "use it or lose it" rule, with unused funds subject to forfeiture or limited rollover, depending on state regulations. |
| Medicare Eligibility | Once enrolled in Medicare, individuals can no longer contribute to an HSA, but they can continue to use the funds for qualified medical expenses. | MSAs have specific rules regarding Medicare eligibility, and account holders should consult state regulations for guidance. |
| Access to Funds | Typically, account holders receive a debit card or checks to access HSA funds for qualified expenses. | Access to MSA funds may vary depending on the financial institution that manages the account. |
This table outlines the key differences between Health Savings Accounts (HSAs) and Medical Savings Accounts (MSAs), including their primary purpose, eligibility, tax benefits, contribution limits, and rules regarding rollover and investment options. While both accounts are used to save for medical expenses tax-free, they have different requirements and regulations.