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Archer Medical Savings Accounts (MSAs)

Small employers and self-employed individuals can use MSAs in lieu of Health Savings Accounts to combine low-cost high-deductible health coverage with a savings-type account. The opportunity to set up new MSAs expired at the end of 2007. However, existing MSAs can continue to receive contributions.

Eligibility

Archer MSAs are open only to small employers (those with 50 or fewer employees) and self-employed individuals with high-deductible plans. In 2012, they are health insurance plans with an annual deductible between $4,200 and $6,300 for family coverage, or $2,100 and $3,150 for single (self-only) coverage. The health insurance must have an annual limit on out-of-pocket expenses of $7,650 or less for families, or $4,200 or less for singles.

Contributions

As in the case of HSAs, employer contributions to MSAs for employees are not taxable to employees. Contributions are limited to 75% of the annual deductible for family coverage or 65% of the annual deductible for self-only coverage.

If a high-deductible health plan is not in place for the entire year, the contribution is limited to the ratable portion of the annual deductible for the time the plan is in effect.

These same contribution limits apply to self-employed individuals and employees who make contributions on their own behalf. Personal contributions within these limits are deductible. Contributions must be made in cash (they cannot be made in the form of stock or other property). ...