A medical savings account (MSA) is an account in which an individual can make tax-deferred deposits into for medical expenses. This type of account is usually associated with self-employed taxpayers. When you take money out of this account it is tax free if you are using it for medical expenses. The MSA must be accompanied by a HDHP. The minimum deductible for the HDHP is $1,950 or 3,850 for family coverage. The maximum deductible for the HDHP is $2,900 or 5,800 for family coverage. The maximum out-of-pocket expenses for the HDHP are $3,850 or 7,050 for family coverage.
If you take money out of the account it goes towards the deductible expenses in any given year. MSA can cover most forms of medical expenses including, medical care, disability, vision care, dental care, and long term care whether they were billed through the qualifying insurance company or not. Once the deductible is met in any given year, then the MSA will pay the balance of the medical expenses covered in that year. If you have money left over at the end of the year in your MSA, you can either let it roll over into the next year or you can withdrawal it as taxable income.