The 3 Key Components of an MSA
A member’s out-of-pocket costs are impacted by how they apply their MSA deposit funds.
The Deductible
A deductible is the total amount a member must pay before the insurance company starts to pay.
Not all costs count toward a deductible, only certain costs the insurance plan has agreed to cover. In an MSA, the plan-covered costs are Medicare Parts A and B expenses obtained from a Medicare-participating provider.
In an MSA, a member’s annual liability for plan-covered expenses is capped at the deductible amount. They won’t pay more than that amount for Medicare A and B costs incurred from Medicare providers.
The Deposit
The deposit is a lump sum of money from Medicare that’s placed into the member’s special bank account.
The intent of the deposit is to pay down the plan deductible. However, the member chooses what to ultimately do with the deposit funds.
The Covered Expenses Out-of-pocket
All Fenyx Health Group MSA plans have a deductible amount higher than the deposit amount. This means a member may have to pay some plan-covered costs out-of-pocket.
Members can get an idea of how much money needs to come from their own pocket by subtracting the deposit amount from the deductible amount.
Members pay less out-of-pocket to reach the deductible if they apply their deposit funds toward plan-covered expenses (versus spending the deposit on other kinds of expenses).
Putting the Components Together
Consider this example MSA plan with a deposit of $500 and a deductible of $1,250. The out-of-pocket amount for plan covered services is $750 ($1,250 – $500).
Member A spends $300 of their deposit on an annual wellness visit and lab tests. These are all Medicare A/B expenses that count toward the deductible.
To cover the deductible of $1,250, they can apply the remaining $200 deposit plus $750 out of their own funds.
Member B spends $300 of their deposit on new eyeglasses, which are not a Medicare A/B expense and do not count toward the deductible.
To cover the deductible of $1,250, they can apply the remaining $200 deposit plus $1,050 out of their own funds.
The best way to minimize the amount of out-of-pocket funds needed to reach the deductible is for members to apply their deposit funds toward plan-covered costs.
