MSAs and HSAs are tax-exempt savings accounts that can help lower your healthcare costs. HSAs come with non-Medicare private plans, whereas MSAs come with Medicare Advantage (Part C) plans.

If you’re enrolled in a health savings plan (HSA) or a medical savings account (MSA) plan, tax-exempt money is deposited into your bank account to pay for medical care.

You can deduct this money from your taxes in both cases, but your health plan will have a high deductible. That said, you can use the money in your account to pay your deductible.

Read on to learn how HSAs and MSAs work and their key similarities and differences.

With an HSA, you typically have to be enrolled in an employer high deductible health plan (HDHP) or one you select through the Health Insurance Marketplace.

On the other hand, with an MSA, you need to enroll in a special Medicare Advantage (Part C) plan, which also means you have to be eligible for Medicare. Part C plans are private insurance plans that work as an alternative to Original Medicare (parts A and B) and offer the same coverage.

The second key difference between the two types of savings accounts is the source of the money. With an HSA, the money comes out of your paycheck, and your employer also makes an additional contribution. On the other hand, with an MSA, the money comes from government funding of Medicare.

Since both HSA and MSA plans are private plans, your out-of-pocket costs depend on your specific plan’s coverage, your deductible, and your premium.

HSA plans tend to have lower premiums than other comparable health insurance plans. MSA plans, on the other hand, tend not to have premiums, unless you want to add extra benefits like coverage for prescription drugs, vision, or dental care. However, as with all Part C plans, you still must pay the Part B premium, which in 2025, starts at $185 a month.

Another factor to consider in terms of cost is the contribution to your savings account. With an HSA, in 2025, you can contribute up to $4,300 for yourself or $8,550 for your family. In addition, if you’re over age 55 years, you can add another $1,000. Depending on your employer’s contribution, you may have to contribute part of the money as well. However, you can later deduct your contribution from your taxes.

But with an MSA, you are not depositing into the account yourself. Instead, Medicare funds the account with an amount that depends on the specific plan you choose. You can select the best option in your area by viewing available Part C plans on Medicare.gov.

It’s also noteworthy that with MSA plans you cannot be billed more than the Medicare-approved amount for healthcare services.

A big consideration when choosing between the two is that you cannot continue contributing to an HSA once you’re enrolled in Medicare.

This is true even if you’re able to keep your other insurance plan as a secondary payer. Should you continue contributing to an HSA after enrolling in Medicare, you may have to pay that money back later in taxes.

Some other factors to consider when comparing HSAs to MSAs are:

  • Prescription drugs: Most Marketplace and group insurance plans should include prescription drug coverage. However, while some Part C plans do offer it, MSA plans do not. This means you’ll also need to enroll in Medicare Part D.
  • Network: HSA plans may have in-network providers you have to stick to, but MSA plans are structured so that you can go to any provider you choose.
  • Prior authorization: Non-Medicare private plans may have different rules regarding preauthorization. With MSA Part C plans, once your plan approves a treatment, this approval remains valid as long as needed. If you switch plans, you have at least 90 days before the new plan can request a new approval for ongoing treatment.

Is an archer MSA the same as an HSA?

Archer MSAs should not be confused with Medicare MSAs. Archer MSAs were the precursors to HSAs. They were exclusively available to self-employed individuals or those working for companies with 50 or fewer employees.

Is a Medical savings program (MSP) the same as an MSA?

Medical savings programs (MSPs) are different than MSAs. MSPs work directly with Original Medicare rather than Medicare Advantage (Part C).

Both MSAs and HSAs allow you to save tax-exempt money for your medical expenses. In both cases, you’ll have a high deductible with your plan, but you can use the money in your account toward this deductible.

However, one key difference is HSAs come with non-Medicare private insurance plans, while MSAs come with Medicare Advantage (Part C) plans. In addition, with an HSA, you and your employer contribute to the account, whereas with an MSA, Medicare makes the contribution.