Medical Savings Account - MSA

Paying for health insurance can be a real drag, especially if we’re young, healthy, and convinced we’re invincible.

News flash: we’re not invincible, and even though health insurance can be a little expensive, there are ways our responsible selves can ease the financial burden while continuing to be covered…just in case our non-invincible status begins to show.

During the ‘90s, the powers that be introduced one of those ways, known as an MSA, or “medical savings account.” MSAs, when coupled with HDHPs, allowed peeps to save up for and afford medical expenses, while at the same time lowering the overall cost of medical treatment.

An HDHP is a high-deductible health plan, and here’s how it works:

Picture a sandwich. Not just any sandwich, but an ooey, gooey, PB&J. Mmm, right? Okay, in this analogy, our HDHP is the jelly and the MSA is the peanut butter. The HDHP is our actual coverage plan: it’s sort of sweet, kind of messy, maybe thicker than we need over here, but a little sparse over there. The MSA is like the peanut butter, because it’s the part that gets the HDHP to...stick. We put money into the MSA (tax-free), and then we can use that money to pay for our deductible health expenses.

After changes in healthcare laws created health savings plans (HSAs) in 2003, MSAs largely went the way of the dinosaur. In fact, MSA funding expired in 2007, though there are some MSAs still out there in existence. HSAs act very similar to MSAs: in simple terms, they are a tax-free savings account where we can stash money until we need to use it for medical expenses.