MSA or HSA: Can I Keep My MSA Or Do I Need to Convert it into an HSA?

The Medical Savings Account (MSA) is an older form of the Health Savings Account (HSA).

You cannot open a new MSA. You cannot contribute additional money into your MSA.

However, you can keep your MSA as long as you like. When you retire, it will automatically turn into an Individual Retirement Account (IRA) and you can withdraw money from it then for any reason (not just medical).

Or, if you don't want to keep your MSA, you can roll it into your HSA.

Why would anyone want to keep their MSA?

I can think of only one circumstance. My wife and I have kept our MSA because our HSA custodian does not offer very good investment options yet in their HSAs. They only have a type of money market account for their HSA offerings. We want to put money into mutual fund accounts rather than money markets, but with their HSA product, we can't do that yet, until they expand the options.

For the most part, it will make perfect sense to roll your MSA into an HSA. However, if you decide not to do that, it is your right to hang on to that MSA as long as you wish, and retire with that money or use it for medical expenses along the way.

Daryl Kulak is the author of the book Health Insurance Off the Grid - A Wonderful Way to Use Alternative Medicine and Save Money on Insurance Using the New Health Savings Account (HSA). The book provides a simple plan to get your self-employed or small business health insurance costs under control using a unique approach you won't find anywhere else. The book is available for sale as an e-Book or paperback at the Website http://www.healthoffthegrid.com



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