Trump to retirees, take advantage of these tax-advantaged Medicare savings accounts
As part of President Trump’s efforts to improve health care coverage for seniors in the U.S., he is looking to expand the use of tax-advantaged medical savings accounts.
An executive order signed on Thursday seeks to reduce barriers to “medical savings accounts” among Medicare Advantage beneficiaries, which could help seniors pay for care.
Late Friday, Trump tweeted his efforts will push Medicare premiums to a 13-year low.
Medicare Advantage plans are offered by private insurers – who were approved by Medicare – and include bundled Part A, B and sometimes D coverage. Insurers that provide these plans receive payments from Medicare to cover costs.
About 34 percent of all Medicare beneficiaries are enrolled in a Medicare Advantage plan. That’s more than 22 million individuals – a number that is expected to grow as more baby boomers retire.
During a Thursday visit to the retirement community The Villages in Flordia, one of the nation's largest, Trump told the crowd the plan would be watered down by the Democrats.
Participating insurance companies can choose to offer Medicare MSA Plans, which are similar to health savings accounts (HSAs), and combine a high-deductible plan alongside a special savings account.
The Medicare MSA Plan puts a certain amount of money into the account each year, which can be used to pay for care costs before the deductible is met – including care that is not covered by Medicare. Enrollees cannot deposit their own money.
Like health savings accounts, withdrawals are not taxed if they are used for “qualified medical expenses.”
If those funds are used up, an individual will pay out-of-pocket until the deductible is met. Money not used at the end of the year will roll over – and funds grow tax-free while accruing interest.
The plans, however, do not cover Part D prescription drug costs.
According to the Kaiser Family Foundation, only about 5,600 people are enrolled in Medicare MSAs in 2019.
On Thursday, Trump announced his plan to expand private-sector Medicare coverage by providing more plan choices to seniors, bolstering telehealth services, lowering Medicare Advantage costs and protecting the program from Democrats’ plans to expand it into Medicare for All.
A study by the Kaiser Family Foundation found that Medicare beneficiaries who enroll in a Medicare Advantage plan spend less and use fewer services before they make the switch when compared to those that remain in Medicare.
Medicare alone accounted for 15 percent of government spending in fiscal 2016, according to data from the Pew Research Center. Other health programs made up 13 percent.
About 64 million people were covered by Medicare in 2019.