What is a medical savings plan?


Quick Answer

A medical savings plan is a plan that combines a high-deductible health plan with a medical savings account, the Centers for Medicare and Medicaid Services explains. People can use their savings accounts to assist in paying for health care and, when they reach their deductibles, have coverage available through a high-deductible insurance plan.

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Full Answer

The two parts of a Medicare MSA Plan are a high-deductible insurance plan and a medical savings account that a participant can use to pay for health care costs, according to Medicare.

The first part, the high-deductible health plan, is a special type of high-deductible health Medicare Advantage Plan, Part C. This plan only covers a participant's costs once he meets a high yearly deductible that varies by plan. The second part is the medical savings account, which is a savings account into which the Medicare MSA plan deposits money. Participants use the money in the savings account to pay health care costs before the deductible is met, reports Medicare.

Additionally, some plans may cover extra benefits for an added cost, such as vision, long-term care or dental not covered by Medicare. Medicare MSA Plans don't cover prescriptions, so participants must add drug plans in order to have coverage, Medicare notes.

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