How are Archer Medical Saving Account and Health Savings Account different?
Mike asked:
Greetings All,
Could anyone tell me the difference between Archer Medical Saving Account and Health Savings Account?
Under High deductible plan, there is an out-of-pocket limitation. Does this mean a taxper is limited to only deduct a certain amount of medical expenses?
Dana Sklenar
Greetings All,
Could anyone tell me the difference between Archer Medical Saving Account and Health Savings Account?
Under High deductible plan, there is an out-of-pocket limitation. Does this mean a taxper is limited to only deduct a certain amount of medical expenses?
Dana Sklenar
The Archer Medical Savings Account (MSA) was a precursor to the Health Savings Account (HSA). Major differences are:
1. The MSA applied only to self-employed individuals or employees in businesses with fewer than 50 employees. The HSA is available to anyone.
2. The minimum deductible amounts for both accounts was different. In 2005, the MSA single deductible was $1,750 versus $1,000 for HSA. Family deductible differed similarly.
3. The contribution limits were different .. 65% of deductible for MSA versus 100% of deductible for HSA.
4. The penalty for nonmedical withdrawals was 15% for MSA, and it is 10% for HSA.
Anyway, this doesn’t effect any taxpayers who did not have an MSA, since the MSA expired in 2005 (no new MSA plans are being created). Persons holding an MSA can roll it over to an HSA.
As for your second question, in an HSA for 2007 a single person can contribute 100% of his deductible (or $2,850 whichever is less), plus an $800 catchup for age 50 or over. This is not related to the maximum OOP expenses. The maximum OOP expenses is a criterion for a plan to be an HSA.
Your contribution to the HSA is tax-deductible (or pretax if your employer contributes). When you pay medical expenses from your HSA, it is not tax deductible. If you have other expenses that you did not pay out of your HSA, you can deduct them on Schedule A. In particular, OOP expenses not paid for with HSA money, no matter how much those expenses are, can be deducted on Schedule A.
From the wording of your question, you may be confusing a “tax deduction” on your tax return with the “deductible” on your HSA. The latter refers only to the HSA and not your taxes.