Medicare Medical Savings Account Loans

Medicare covers many of your medical expenses after you turn 65. However, there are some things it does not cover, which is why beneficiaries in Florida and Texas often choose a Medicare Advantage plan or a Medicare Supplement plan. This page will focus on a particular type of Medicare Advantage (Part C) plan: Medical Savings Account loans or MSAs for short.

Who’s Eligible for a Medicare MSA?

If you have Original Medicare (Parts A and B), you may qualify for a high-deductible MSA plan, which uses a flexible savings account funded by the government each year.

If any of these apply to you, you’re INELIGIBLE:

  • You’re in hospice care
  • You qualify for Texas or Florida Medicaid
  • You have End-Stage Renal Disease
  • You live outside the U.S. for half the year or more
  • You already have health insurance that would cover some or all of your annual deductible

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How Do Medicare MSAs Work?

MSA plans are sold by private insurance companies that contract with banks to arrange the savings accounts. Medicare places a specific amount of money into your account at the beginning of each year. The deposited money is tax-exempt, and you can withdraw it from your MSA, tax-free, so long as you use it for approved medical expenses.

Coverage is provided only when you meet the high deductible, which includes inpatient hospital insurance (Medicare Part A) and outpatient medical insurance (Medicare Part B).

Some MSAs may offer additional coverage for dental, vision, or hearing care. Since MSAs typically don’t include prescription drug coverage, you can enroll in a separate Medicare Part D plan. 

Important Note: Only Medicare-covered services count toward your MSA deductible. Copayments on medications will not count.

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You’re responsible for all medical costs BELOW the deductible.

Once you have hit your yearly deductible using the MSA loan, the remainder of your Medicare-eligible healthcare costs are COVERED for the rest of the year.

What’s Covered?



Part A hospital care

Part B outpatient care

Prescription drugs

Not automatically

Vision, dental, or hearing aids

Not automatically

Alternative medicine


Nutritional supplements


Cosmetic procedures


Diagnostic tests 

* Maybe

Physical therapy

* Maybe

Chiropractic care

* Maybe

* on a case-by-case basis

When Should I Enroll?

You can join during Medicare AEP from October 15 to December 7 each year. You can also enroll in a Medicare MSA when you first enroll in Medicare Part B.

How Much Will I Have to Pay?

It’s difficult to pinpoint your exact costs. MSA policyholders in Texas and Florida will keep paying their Medicare Part B monthly premium of $148.50, as well as a premium for enrolling in a standalone Part D plan.

As soon as you receive your initial deposit, you can transfer it from your MSA to a different savings account — although the bank may have certain rules about transfer fees, minimum balances, and/or interest rates.

Is a Medicare MSA a Good Choice?

Medicare MSA loans are more like a self-directed health insurance plan than a managed Medicare Advantage program. The money deposited into someone’s account is yours to keep when you stay in the plan. And it goes with you, just like how an employer-plan HSA is portable.

Disabled Medicare beneficiaries (under 65) can get good protection from an MSA. But an MSA plan can also be attractive for healthy Medicare recipients with zero chronic health conditions. You’ll want to look at the plan’s annual deductible, but it may cover MOST routine spending for healthy applicants. Therefore, MSAs are a cheaper way to insure against dire health risks.

Contact an Agent to Learn More

MSA plans vary, so it’s best to contact a professional to see if one is right for you. Lacayo Group Insurance is well-versed in Medicare Advantage and Medicare Supplement plans, so give us a call today!