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What is an MSA - Medical Savings Account?

A Medical Savings Account permits eligible individuals to establish a tax-deferred medical savings accounts (MSAs) to pay medical expenses in conjunction with a high-deduction health plan through a trust or custodial account. On January 1, 1997, a pilot program began that was limited to four years and 750,000 policies under the program. The pilot program must be extended by the IRS/US Treasury Department on a periodic basis.

To be eligible for an MSA, an individual must be either employed by a small employer with 50 or fewer employees that establish a high deductible health plan, or a self-employed person covered by a high deductible health plan. In 2003 the Health Savings Account (HSA) was created. Since HSAs are a more widely available and improved version of the MSA, the original program is by and largely obsolete. MSAs are still available, but there are only a few institutions that will open new MSA accounts. Today, they are called Archer MSAs.