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Medical savings accounts (MSA)

Medical savings accounts (MSA) refers to savings accounts designated for out-of-pocket medical expenses. In an MSA, employers and individuals are allowed to contribute to a savings account on a pre-tax basis and carry over the unused funds at the end of the year.

One major difference between a Flexible Spending Account (FSA) and a Medical Savings Account is the ability under an MSA to carry over the unused funds for use in a future year, instead of losing unused funds at the end of the year.

Most MSAs allow unused balances and earnings to accumulate. Unlike FSAs, most MSAs are combined with a high-deductible or catastrophic health insurance plan.

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