Archer Medical Savings Account

(redirected from Archer MSA)

Archer Medical Savings Account

An account into which one makes tax-deferred contributions that can be used for present and future medical expenses. An Archer MSA is used in conjunction with an insurance policy with a high deductible. An Archer MSA may be used in order to offset the high deductible on one's other insurance policy.

One does not pay taxes on withdrawals from a health savings account, unless one withdraws funds for a non-medical reason, in which case they are taxed as ordinary income. If one is under 65, there may also be a penalty associated with a non-medical withdrawal.
References in periodicals archive ?
16 October 2013 -- Pennsylvania USA-based investment management services firm Market Street Advisors said that American Independence Financial Services LLC has selected its Archer MSA investment management platform and operational services from MSA Ops to support its new strategic partnership with JAForlines Global.
At the same time, the law also increased the tax on distributions from a HSA or an Archer MSA that are not used for qualified medical expenses from 10 percent to 20 percent of the amount used.
* If you purchase ineligible items using another type of health savings account, like an HSA or Archer MSA, those medical expenses will be included in your gross income and be subjected to an additional tax of 20%.
Increases the tax on distributions from a health savings account or an Archer MSA that are not used for qualified medical expenses to 20 percent of the amount used.
The Archer Medical Savings Account, the small-business version of an HSA, will see similar restrictions, with the only difference being the Archer MSA's penalty for nonmedical withdrawals now stands at 15% and will go up to 20%.
Funds may be transferred (or rolled over) from one HSA to another HSA or from an Archer MSA (see Q 210) to an HSA, provided that the account holder effects the transfer within 60 days of receiving the distribution.
This was also called an Archer MSA after one of the sponsors.
Prior to HSAs, Congress created medical savings accounts, subsequently renamed Archer MSAs. An Archer MSA is a high-deductible health insurance plan combined with a side account for qualified medical expenses.
The Medicare Act created HSAs, a new savings vehicle intended to succeed the Archer Medical Savings Account (Archer MSA).
Within limits, contributions to an Archer MSA are deductible in determining adjusted gross income if made by an eligible individual and are excludable from gross income and wages for employment tax purposes if made by an eligible individual's employer.
Except for rollover contributions from an Archer MSA or an HSA, contributions must be in cash and can't exceed the maximum annual contribution amounts explained below.
Next, we opened our Archer MSA, and the IRS allows us to contribute 75% of our deductible, or $3,375 per year.