Medicare Medical Savings Account (MSA)

Aug 10, 2007

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  1. craig_ritter
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    craig_ritter Guru

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    Medicare Advantage MSA's have not made much of a splash, however, this could change with the 2008 enrollment.

    For the 2007 plan year, there were only 3 Plan Sponsors who filed an MSA and less than 3,000 enrollments nationally.

    That said, MSA's have some compelling features/advantages and enrollment should be much bigger in 2008.

    What it is: An MSA is simply a high deductible plan with a medical savings account attached to it. CMS set the maximum deduction at $9,500 (in 2007), but most companies set their deductibles at $2,500 to $5,000.

    At the beginning of the year, the Plan Sponsor makes ONE lump sum deposit into the Enrollee's account. I'm seeing contributions ranging from $1,250 to around $2,000. This money can be used to satisfy the deductible, but also to pay for other expenses.

    You can find Medicare's Guide to MSA's here:

    Expenses used to pay for Medicare A & B covered expenses count toward the deductible AND are tax free. Medical Expenses (see IRS Publication for detailed list) which are not A&B covered expenses (dental, hearing aids, glasses, qualified LTCi, etc) incur no tax, however, they don't count toward the deductible. Other expenses (like groceries, utilities, etc.) would trigger a tax consequence and, likely, tax penalties as well.

    Any money not used can be rolled over to the next plan year (or used tax free for non A/B Medical Expenses). After the deductible is met, the plan pays 100% of Medicare Covered Expenses.

    Quick Facts:
    -Monthly premium is $0, Medicare Beneficiary must still pay Part B premium.
    -Cannot include a prescription benefit, must buy a stand alone PDP to cover prescription drugs, if desired.
    -Medicare Beneficiary cannot deposit additional money into the account, only money deposited comes from CMS/Plan Sponsor.
    -Non-network, any willing provider who accepts Medicare. Similar to PFFS, but provider could get paid AT TIME OF SERVICE via debit card.
    -Can only be sold during Annual Enrollment (11/15 - 12/31). . .no OEP nor SEP sales.
    -Can also be sold during Initial Coverage Election Period, deposit is pro-rated. . .but NOT the deductible, generally
    -Cannot be sold to those qualifying for VA benefits, Employer Group and/or MediCAID (ie, welfare).
    -Account is set up with a Trustee (like Mellon Bank). Medicare Beneficiary gets a debit card and/or checkbook to pay expenses. Small monthly trust fee applies about $4/month.
    - Interest accrued in account is tax-free when used for qualifying Medical Expenses (Trustee sets rules for when/if/how much interest is paid.)
    -Cannot disenroll during Open Enrollment (Jan-Mar). No leaving during the plan year (except death or leaving service area), but you can, of course, change plans during the following year's Annual Enrollment.

    As an IMO, I'm aware of at least 3 MSA's which will be available for agents/brokers to sell this AEP (Nov. 15th). Feel free to contact me for more info or ask your current IMO. I only have exact plan specifics on one of the three (filed, not approved, of course) which has limited county availability, but has a $1,500 deposit and $3,000 deductible (net MOOP of $1,500, which is lower than most PFFS). Not a bad deal!

    More specifics on 2008 plan filings should start leaking out late August or September.

    If you have questions or comments, please post and I'll try to answer. Hope this info helps! (For Agent Use Only)
     
  2. midwestbroker
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    It sounds like a great alternative to a PFFS plan.
     
  3. Guest
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    Hey Craig, welcome to the board.

    I have looked into MSAs pretty closely and decided against selling them for three reasons:
    1. They are too complicated. Most seniors will not understand them and if they do not understand they do not buy. I do believe this will change with the boomers coming in to Medicare since they are familiar with HSAs though
    2. Most areas where they are offered there are better plans that are also zero premium being offered like Today's Options
    3. Commissions are weak. The only carrier I know of that sells these is Unicare and they pay $15 per month with no advance commission. Who are the other carriers offering these?
    For those of you who do not know, Craig runs a reputable IMO that has a great medicare supplement quote engine for agents. Although it is not always accurate I have been able to point out errors and they are pretty quick to fix.
     
    Guest, Aug 11, 2007
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    For the savvy senior it is actually a smart way to go.

    $125/month for a medicare supplement = $1500 per year

    $0/month for MSA + $1500 ded = $1500 per year

    In year 2 if you do not use your medicare supplement you pay = $1500 per year

    In year 2 if you do not use your MSA you pay = $0 per year and another $1500 is deposited in your account so you have no OOP expenses either

    Of course, if you start using the plan a lot this would be less attractive, but still I think they will become more and more popular. But who is going to target any market with a 6 week window? not me.
     
    Guest, Aug 11, 2007
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  5. wilkin
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    I really like the MSA concept but I agree they are confusing to most. Have you ever had an appointment with a soon to retire engineer-type who when you arrive shows you his spreadsheet comparing nine different companies and wants your numbers to plug in with the rest? That's the guy who will understand the value in an MSA. And, you will be the only one with one to show him!

    I also want to put in a plug for Craig Ritter. He knows more about Medicare, Medicare Supplements and Medicare Advantage plans than any one you'll ever meet. And no one is more honest to deal with.

    -Bill
     
    wilkin, Aug 11, 2007
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  6. midwestbroker
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    I think that is a great point, anyone who understands a HSA program will understand the MSA program.

    However, I think if CMS wants seniors to be attracted by them, they should have the same special election period that special needs plans have. That would allow seniors a one time change to them any time during the year. Then again, that is an idea that makes sense, so don't count on CMS to do that any time soon.
     
  7. tommyk
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    Going to a class next seek on the MSA plans. Have not heard of them before and have seen them in this area. Just another bullet for the gun.:policeman:
     
    tommyk, Aug 13, 2007
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  8. senior-advisor-indiana
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    senior-advisor-indiana Guru

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    Make sure your you leave your gun in the car or atleast conceal it when you are walikg into a seniors house. Sometimes if they are hesitating on buying I will slide my jacket over a couple inches so they can see it. My closing ratio went up drastically.:)
     
  9. craig_ritter
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    Kyle: I appreciate the kind words, thanks! My Medicare Quote Engine sometimes is tough to keep up with. We have it in 8 states times 10 or so companies which means we have to update rates 80 times/year, whew!

    Bill: Thanks to you as well, you are too kind!:embarrassed:

    There were two companies offering MSA in 2007: Unicare/Wellpoint and American Progressive/Universal American (California Blue Cross did as well, but it’s a subsidiary of Wellpoint). The third I've seen so far is a rural HMO based in NE PA called Geisinger. I'm expecting that more companies will offer it, but I haven't seen this yet. (There are two commission contracts available with Unicare, one is the $15/month and the other pays $300 or so advanced, btw.)

    To Kyle's point that this could be too confusing, that's probably the rub. Conceptually, a deductible plan isn't hard to grasp, but Seniors are more accustomed to first dollar plans. Add in the plan sponsor contribution and tax ramifications, and you might start losing people. When I first read about PFFS plans, I thought these would be a tough sell as well due to the varing co-pays and co-insurance, etc., however, these plans sold very well. . .too well, IMHO.

    PFFS plans are squarely in the gunsights of Congress, however, MSA plans might be more apt to fly under the radar, since the Medicare Beneficiary is the one getting the money (certainly, the Plan makes some $$, too).

    Also, unlike PFFS plans, the MSA Plan Sponsor is not required to return a % (historically 25%) of the difference between the plan bid and the benchmark (100% goes to the Medicare Beneficiary). This might not mean much to you (or your client) on the surface, however, this treatment gives MSA's a competitive advantage over other MA plans (especially PFFS) and give MSA's a better chance to remain competitive.
     
  10. salpro22
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    Alright you senior experts, what have you heard about MSA's for 2008. I love the concept but think it can be improved given my experience in selling HSA's. There is apparently only once MSA plan offered up here in CT through BCBS, which is good from a brand perspective. Can anybody shed some light on the following.

    1) What has stopped insurance companies to jump on the bandwagon and offer these plans w/ or w/out value added benefits.

    2) Are there are new regulations that go into effect in 2008? The medicare website doesn't seem to have much information on these types of plan.

    3) Are the commissions different on these plans then the other types of Medicare plans? NOTE: For all you smart asses out there that will answer this question by saying yes, please provide examples.

    4. Can members find out BEFOREHAND about what Medicare authorizes for a particular service in the event the doctor does not allow assignment?

    4) Do you see MSA's growing in numbers, declining, etc.?

    Now, here is what I would like to see based on the information that Craig, Medicare and a few other sources explicated.

    1) Members CAN contribute money into the accounts with defined limits set similar to an HSA. Using all your account funds to pay for medical expenses and being required to use personal money until you reach your OOPM does not engender the receptivity of this product.

    This makes sense down the road once an account is not being utilized much and the member continues to receive their allowable deposit, but can be a downside for the first 1-2 years.

    2) Obviously a lot more choices on the availability of these plans. I research 6 or so states and mostly all of them only had 1-3 choices. Hopefully this will increase down the road.

    3) Lastly, I would love it if they brought MacGyver back..
     
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