Blog

30 FAQs About the New Medicare MSA in Illinois

30 FAQs About the New Medicare MSA in Illinois

The Medicare MSA is new to the Decatur, IL area, which means there are lots of questions about it.

If you're intrigued by the idea of an annual deposit you can use for your healthcare expenses, and a higher deductible doesn't spook you, the MSA might be the right post-65 health insurance for you.

Health insurance is notorious for being confusing, so we've compiled every question we can think of about the Medicare MSA, and we have clear, straightforward answers for you.

Sign up for our newsletter for weekly emails about senior interest topics like Medicare, health and fitness, gardening, retirement planning, and more!

1. What is a Medicare MSA?

A Medicare MSA is a $0 premium Medicare Advantage product that combines high-deductible health coverage with an annually funded medical savings account.

2. What insurance company offers a Medicare MSA?

In Illinois, Lasso Healthcare offers a Medicare MSA. This is the only company in Illinois that offers one.

3. What is the medical savings account?

The medical savings account, or MSA, is what makes a Medicare MSA so unique. It is annually funded with money you can use for any qualified medical expense.

4. Wait – what's a qualified medical expense?

Qualified medical expenses, or QMEs, are set by the IRS in Publication 502. Everything from acupuncture to X-rays are considered QMEs.

5. Who puts money in the MSA?

Lasso Healthcare puts a deposit in your account every year. They're able to do that because Medicare gives them money for taking on the risk of insuring you. They share those funds with the policyholder.

6. Are there networks?

Unlike other Medicare Advantage plans, the Medicare MSA does not have networks. You can see any doctor or physician as long as they accept Medicare assignment. That's over 90% of all doctors.

7. Is drug coverage included with the MSA?

Drug coverage is not included with an MSA, and that's a rule set by the Centers for Medicaid & Medicare Services (CMS). However, we see this a positive. It means you can pick your favorite Part D plan that offers the best coverage for your exact prescriptions. Plus, you can pick a plan that lets you go to your favorite pharmacies.

8. Can I use my savings account to pay for a Part D drug plan then?

While you can't use your annual deposit to pay for the Part D premium, you can use it for copays or coinsurance at the pharmacy.

9. I like to travel – will the MSA "travel" with me?

Yes. Because the MSA doesn't have networks, it's a great fit for people who like to travel, or snowbirds to go south for the winter. As long as the doctor accepts Medicare assignment, you're golden.

10. Is this really $0 premium?

Yes, the Medicare MSA is $0 premium. That's another rule set by CMS. An MSA is and will always be $0 premium.

Related Reading: How Can Medicare Advantage Plans Have $0 Monthly Premiums?

11. How much money do I get with this annual deposit?

The annual deposit changes every year, but for 2020, it's $3,240. (It was $2,520 in 2019).

12. How high is this high deductible?

In Macon County, the 2020 deductible is $7,400. We're lucky enough to be in Region 1, which is the lowest deductible plan. Other counties might fall into Region 2 or 3, which are $8,400 and $9,400 respectively.

13. What's my total out-of-pocket risk with an MSA?

Your risk is the difference between the deposit and the deductible. In Macon County for 2020, that responsibility is $4,160.

14. I don't want to be on the hook for $4,160... is there any way around that?

Glad you asked! You can purchase something called a Hospital Indemnity plan, and Lasso Healthcare sells one that works with the MSA. It costs between $56-$111 per month, and it offsets your risk by providing up to a $4,000 inpatient benefit. If you're healthy, this is probably overkill. However, some people like the peace of mind that they don't have much risk.

15. Back to the deposit – if I don't use the whole $3,240, do I lose it?

No, those funds roll over year after year. The end-of-year account balance is never use it or lose it. In fact, that money is yours.

16. It's mine? So, I can buy a new TV with it?

Well, not exactly. Technically, you could, but the money in an MSA is supposed to be used for qualified medical expenses, remember?

If you use it for something else, like a TV, you'd be taxed pretty heavily on it. 

17. Other Medicare Advantage plans have perks like free gym memberships through Silver Sneakers – does the MSA?

No, the MSA from Lasso Healthcare doesn't offer Silver Sneakers. To be transparent, their leadership has discussed offering extra benefits, but then they'd have to lower the annual deposit. They'd rather give you that money than spend it on "extras" you may or may not want. 

On the bright side, they do offer up to $250 in gift card rewards for completing a health survey, ordering labs and discussing the results, and seeing your provider.

18. Do I need to do anything special with my taxes?

If you end up using any of the money in your MSA, you'll need to file an IRS Form 8853 and 1040. You'll get the information you need from Optum Bank by January 31.

19. Who's Optum Bank?

Optum Bank is where the Lasso Healthcare MSA funds are housed. They're a market leader in HSAs, currently servicing over 3 million HSA accounts. The MSA is kind of similar to an HSA, which made Optum Bank a great partner for Lasso Healthcare.

Related Reading: What's the Difference Between an HSA and a Medicare MSA?

20. Does the bank charge fees to keep my money in the MSA?

No! There are no fees to keep your money inside the MSA at Optum Bank. In fact, they offer interest-bearing accounts where you can start earning money on your unused deposit. That option becomes available when you have a minimum of $2,000 in the MSA.

21. What happens to the money in the MSA if I die?

The money in the MSA is yours to keep. If you die, the money in the account will go to your beneficiary. If that's your spouse, there's no tax penalty. If it's someone else, ordinary income would apply subject to IRS rules.

22. What's covered by the MSA?

Remember that you can use your MSA funds for any qualified medical expenses (QMEs). However, not all QMEs count towards your deductible.

If you use your deposit for a Medicare-approved expenses, it counts towards your deductible, and you're not taxed on it.

If you use your deposit for QMEs that aren't Medicare-approved expenses, like a routine dental visit, you can use your deposit and you're still not taxed on it. However, it won't count towards your deductible.

If you use your deposit for something that's not a QME – like a TV – you're taxed 50% on it. That's one expensive TV!

23. So... how much do things cost?

When you have an MSA, you pay the Medicare-approved amount for healthcare expenses. There's no coinsurance split or copays involved – you pay the full Medicare-approved amount until you reach your deductible.

Don't worry – the Medicare-approved amount is a negotiated rate that's much lower than retail.

Here are a couple real-life examples from current MSA enrollees:

  1. A $1,174 hospital charge was re-priced to $58.48.
  2. A $664.44 medical bill was re-priced to $183.44.
  3. A $351.28 therapy bill was re-priced to $105.24.
  4. A $213.26 therapeutic procedures bill was re-priced to $58.17.

24. It sounds like it'd take a while to spend all of the annual deposit – is that right?

While an inpatient hospital stay would probably blow through your deposit, basic medical services and visits throughout the year won't.

In fact, Lasso Healthcare tells us that from January through August 2019, 81% of their members spent less than $1,000 of their deposit.

25. OK. So tell me more about claims. I go to the doctor for a check-up... and then what?

You visit the doctor. Their billing department will send a bill to Lasso Healthcare. (You don't pay any copays or anything at the doctor.)

Lasso Healthcare will then adjust the bill to match Medicare-approved rates. They'll also check your progress towards your deductible. If you haven't met your deductible yet, you'll be sent a bill.

If you've met your deductible, Lasso will pay for 100% of the bill.

After all that, you'll be sent an Explanation of Benefits, or EOB. That'll tell you how the claim was re-priced, your progress towards the deductible, and if Lasso paid for the claim or if you need to.

If you need to pay the bill, you can use your MSA funds (you'll have a debit card linked to your Optum Bank account). If you've used all your MSA funds, you'll pay for it out of pocket.

26. I think I'm finally starting to get the hang of this. It sounds good. So why aren't people getting this instead of a Medicare Supplement?

First of all, the MSA is new to the Decatur area. It's in its second year, so many people haven't heard of it. It also takes some education – you want to understand what an MSA is before you feel comfortable enrolling in one.

Second, just like any healthcare product, an MSA isn't going to be right for everyone.

A general rule of thumb is if you're healthy and don't anticipate any major health problems, the MSA is probably the right choice.

However, if you're not confident in your health and want a sure thing, a Medicare Supplement is the way to go.

Our agents at Sams/Hockaday do a great job at evaluating your preferences, needs, and risk tolerance. They'll help you make a decision if you're not sure which plan type is right for you.

27. When can I sign up for the Lasso Healthcare MSA?

There are only two times you can sign up for an MSA:

  • During the Medicare Annual Enrollment Period (AEP), or October 15-December 7
  • When you're first eligible for Medicare Part B – in most cases, when you're turning 65 (this is called the Initial Enrollment Period, or IEP)

Any other time of year is unfortunately off limits.

28. When can I get out of an MSA?

Except for rare cases, the only time you can get out of an MSA is during AEP, or between October 15-December 7.

If you do leave the MSA before the year is over, you're required to pay back part of the deposit – the amount is prorated by the month.

29. If I enroll in the MSA in the middle of the year, do I still get the full $3,240 deposit?

No – the deposit and the deductible are prorated by the month.

30. Do you genuinely recommend the MSA?

We do! In fact, many of the agents here in our office are saying this is the plan they want to sign up for when they turn 65.

Other articles you might like:

Get Your Medicare Planner

Using our planner takes the headache out of Medicare… because it’s personalized just for you, showing you what areas you need to focus on right away, or in upcoming years, and what you can ignore.

Get My Planner
Get Your Medicare Planner

Here's what our clients say…