Self-employed, employed, unemployed? Cover qualified medical expenses with tax benefits.
Medical Savings Accounts
In the United States, a medical savings account refers to a medical savings account program, generally associated with self-employed individuals, in which tax-deferred deposits can be made for medical expenses. Withdrawals from the MSA are tax-free if used to pay for qualified medical expenses. MSA account funds can cover expenses related to most forms of health care, disability, dental care, vision care, and long-term care, whether the expenses were billed through the qualifying insurance or otherwise.
Tax Benefits
Like an HSA, MSAs have tax benefits. The benefits include:
- Tax deductions for contributions you make
- Tax-free interest or other earnings
- Tax-free distributed money, if used for qualifying medical expenses
- Year-to-year rollovers for any contributions you make
- The MSA moves with you when you leave your employer or retire.
Contribution Limits
Like HSAs, MSAs have a limit on how much you can contribute each year without facing a penalty. However, MSAs are much more restrictive in how much and who can contribute. There’s an annual limit to contributions, as well as an income limit.