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Medical and Health Savings Accounts

MSA and HSA Differences

You and your employer can both contribute to your HSA in the same year.
You and your employer can both contribute to your HSA in the same year.

There are several key differences between a medical savings account (MSA) and a health savings account (HSA).

Who Qualifies:

We know that a high-deductible health care plan is needed for both of these plans, but to open an MSA, there are a few more qualifications. To qualify for an MSA you must be an employee, or spouse of an employee, of a company that employs 50 or fewer people -- or you must be self-employed or a spouse of a self-employed person.


Who Can Give You Money:

If you have an HSA, you can make contributions yourself and receive contributions from your employer (or other generous people) within the same year. If you have an MSA, you can't have contributions from your employer and yourself in the same year.

How Much Money You Can Put In:

The IRS maximum for yearly HSA deposits in 2007 is $2,850 for individual plans and $5,650 for family plans. If you are 55 or older, you can contribute an additional $700. The MSA contribution limit is set by a percentage of your annual deductible and by your income. If you have an MSA, you can't contribute more than you earned that year. And no additional contributions can be made based on age.

How Much Early Withdrawal Will Cost You:

In both plans, you will be subject to income tax. There is also additional taxation for early withdrawal if you take out money for something besides medical expenses. This additional taxation varies with the type of spending account -- with MSAs, it's 15 percent additional tax, and for HSAs, it's 10 percent.

For more information about MSAs and HSAs, check out the links below.


Related HowStuffWorks Articles

More Great Links


  • AARP: Medical Savings Accounts.
  • HSA vs HRA vs MSA vs FSA.
  • Mayo Clinic: Is a HSA Right for You?
  • IRS: Health Savings Accounts & Other Tax-Favored Health Plans.
  • JAMA: Health Insurance, The Basics.