Medical Savings Account

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Medical Savings Account

Description and Definition of Medical Savings Account (MSA)

A tax favored medical savings account (MSA) is intended to help the self-employed and employees of certain small businesses that employ 50 or fewer workers save for and pay their medical expenses that are not covered by health insurance. Contributions are deductible and earnings inside the account are not taxed as they build up. Withdrawals are not taxed if the money is used to pay medical expenses. To qualify for an MSA you must have a health insurance policy that requires you to pay at least the first $1,500 (if you are single) or $3,000 (if it's a family policy) of medical bills before your insurance starts paying.


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