How to Qualify for an Archer MSA Your company has 50 employees or less, or you’re self-employed, Your medical insurance is a high-deductible health plan, and You don’t have any other healthcare coverage, such as Medicare. For more information, check out the relevant Federal regulations. Few states have regulations concerning Archer MSAs, but to be […]
How to Qualify for an Archer MSA
- Your company has 50 employees or less, or you’re self-employed,
- Your medical insurance is a high-deductible health plan, and
- You don’t have any other healthcare coverage, such as Medicare.
For more information, check out the relevant Federal regulations.
Few states have regulations concerning Archer MSAs, but to be safe, check with your state legislature. Simply Google [State] Archer MSA regulations.
Definition of a High-deductible Health Plan (HDHP)
To be eligible for an Archer MSA, your healthcare coverage must meet the HDHP definition.
This means your insurance has a higher annual deductible than another health insurance plan. There are limits for deductibles and out-of-pocket expenses:
Minimum annual deductible
Maximum annual deductible
Maximum annual out-of-pocket expense
There are some family plans that don’t meet the HDHP limit. If the individual deductible for one family member is met and you don’t have to meet the entire family deductible for benefits to kick in, then those plans do not qualify.
Mr. Zen has health insurance with your company, and the annual deductible for the family plan is $4,500, with an individual deductible of $1,800 for each family member. Mrs. Zen has $2,200 of covered medical expenses under the Archer MSA, and they had no other medical expenses that year. Your company’s insurance plan paid Mr. Zen $400 because Mrs. Zen met the individual deductible even though they did not meet the entire family deductible. This type of plan does not qualify as an HDHP.
There are 2 limits to how much you or your employee can contribute to an Archer MSA:
- You can contribute up to 75% of your health plan’s family deductible (65% for a self-only plan).
- You cannot contribute more than the employee earned during the year. If you’re self-employed, that means you can’t contribute more than your net self-employment income.
A distribution is money you get from your Archer MSA. The trustee (usually a company representative or yourself if you’re self-employed) can send distributions from your Archer MSA account. This needs to be reported to the IRS on Form 1099-SA.
Contact your tax advisor for more information about how Archer MSAs work.
IRS Publication 969 – Get more information from the IRS’s Publication 969 covering Archer MSAs.