What’s an MSA?

A Medical Savings Account (MSA), often referred to as an Archer MSA, is a way for self-employed persons and employees of small business to save money to pay for medical costs. If you don’t have an MSA now and you're an employee, you might not be able to get one, because most employers are now using Health Savings Accounts (HSA). See HSAs and Your Tax Return. 

If, however, you were enrolled in an MSA before January 1, 2008, you can keep your account. The only other possibility of starting an MSA is for workers who began working for an employer after December 31, 2007, who offers both insurance through a High Deductible Health Plan (HDHP) and an Archer MSA. 

Important: Keeping records for an MSA is just as important as it is for someone who has an HSA. Get receipts (itemized, if possible) or other paperwork for any medical expense you use the MSA for. You don’t have to include receipts and other paperwork with your return, but it’s good to keep for your tax records. 

Who’s Eligible for an MSA? 

If you or your spouse works for a small business or are self-employed and maintain a HDHP, you may be eligible for an MSA. The IRS defines a small business as one that has had 50 or fewer employees during the previous two calendar years. 

Any HDHP that involves an MSA must have a minimum deductible of $1,600 for single coverage and a maximum of $3,200 for family coverage for tax year 2024. The maximum annual deductible and other out-of-pocket expenses is $8,050 for self-only coverage and $16,100 for family coverage. 

Another eligibility requirement is that you or your spouse cannot have any other medical insurance, including Medicare, but you may have standalone dental and vision coverage, disability, and long-term care insurance. 

Tax Benefits 

Like an HSA, MSAs have tax benefits. The benefits include: 

• Tax deductions for contributions you make 

• Tax-free interest or other earnings 

• Tax-free distributed money, if used for qualifying medical expenses 

• Year-to-year rollovers for any contributions you make 
• The MSA moves with you when you leave your employer or retire. 

Contribution Limits 

Like HSAs, MSAs have a limit on how much you can contribute each year without facing a penalty; however, MSAs are much more restrictive in how much and who can contribute. There’s an annual limit to contributions, and an income limit. 

How much can I contribute to an MSA?  

The amount you or can contribute to your HSA depends on the type of HDHP coverage you have, your age, the date you become an eligible individual, and the date you cease to be an eligible individual. For 2024, if you have self-only HDHP coverage, you can contribute up to $4,150. If you have family HDHP coverage, you can contribute up to $8,300.  

Who can contribute to an MSA? 

Either you or your employer can contribute to your MSA, but not both. 

Filing Your Return with an MSA 

You should receive Form 5498 showing how much you or your employer contributed to your MSA during the year. To report your MSA contributions and distributions on your 1040.com return, complete the Form 8853 screen.