What is Medical Savings Account

Medical savings account is an account that offers reimbursements for covered medical expenses. It is neither funded by an employer or employee. Tax deferred interests can be accumulated in the savings account, just like individual retirement account (IRA). The funds in a medical savings account are controlled by the owner of the account. You must have a high deductible health insurance plan before you will be considered for a medical savings account.

Besides, you must be under employment and receive revenue every month. You can be self employer or work at a firm. If you are working for an employer, the firm must have not more than 50 employees. The minimum annual deductible amount of self coverage health insurance plan is $1600 - $2400. The minimum requirement of deductible for family coverage should be in between $3200 - $4800. The annual expenses for self coverage should not cost more than $3200 while the annual expenses for family coverage should not exceed more than $5850.

The savings for the medical savings account will be rolled over from year to year. If you resign from the company, the savings will continue to roll over to the next year. You will still be able to assess the funds and withdraw it to pay medical expenses even after you quitted your job. The funds in a medical savings account can be used to make payment for the premiums of COBRA, long term health insurance, and other health insurance premiums. The funds in the savings account are not taxed. However, if you use the funds to pay non medical expenses, you will get taxed.