Your Health, Your Money, Your Doctor ®
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Your Health, Your Money, Your Doctor ® |
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How Medical Savings Account Money Can Be Used 1. Can I go to the doctor of my choice? Yes. That is one of the great advantages of the Medical Savings Health Plan. You are in charge. You pick the doctor. If you are not satisfied with the doctor, you change doctors. You don't have to worry about the horror stories of a doctor who is prevented from giving care when there is a financial person in the background (the person you've never seen) who is saying, "No, No, No." With this plan you are in charge. 2. May Medical Savings Account money be used on medical expenses that do not count as covered expenses under the insurance policy? Yes. This is another of the great advantages of the Medical Savings Health Plan. The typical American is out-of-pocket a considerable amount every year for medical expenses that are not covered under the insurance plan, due to the fact that the plan may not cover dental, or because of deductibles and copayments. The individual is presently paying all those amounts with after-tax dollars. If you have a daughter who needs her teeth straightened at a cost of $4,000, it will typically cost you over $6,000 in ordinary pretax income. With a Medical Savings Account, you are going to cut out all of the extra cost by paying for the dental work with your tax-free (Self-Employed Only) Medical Savings Account. 3. What kind of medical expenses qualify for favorable tax treatment under the IRS code (Self-Employed Only)? In general, any treatment for an illness or injury and any preventive care, such as a mammogram, or a PSA test. Medical Savings Accounts cover normal medical expenses that are usually not covered by traditional health plans, such as: dental care, glasses, and hearing aids. Eligible medical expenses under the Medical Savings Accounts are medical expenses permitted under the Internal Revenue code. 4. Can the cost of dental care and eyeglasses be applied to the deductible on the catastrophic insurance? No, the catastrophic insurance is conventional major medical which covers hospital, doctor, prescription drugs, and some preventive care costs like mammograms and PSA tests. You may pay the cost of dental and vision out of your savings account, and you are encouraged to do so, but that cost does not count against the deductible on the catastrophic insurance. 5. Can Medical Savings Account money be used for nonmedical expenses? Yes, but money withdrawn before age 65 for nonmedical purposes is subject to income taxes and a 15% federal excise tax (Self-empoyed only, non-qualified accounts incur no penalty). California has an additional early withdrawal penalty. 6. What happens to the money in my account that I don't spend? At the end of each year, the money not spent will roll over into an investment account. You will earn interest on the money. The interest is not taxable (self-employed only) unless you spend it for nonmedical purposes. 7. If I accumulate $40,000 or even more in my MSA, when I reach retirement age can I use the funds for living expenses? Yes. At age 65 the MSA functions like an IRA (self-employed only). You can withdraw money without penalty, paying only normal income tax. And after retirement you can withdraw the accumulated MSA savings tax-free to pay out-of-pocket medical expenses -- like nursing home care and other expenses not covered by Medicare. Key Details of the Medical Savings Account Law
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