Which account was formerly known as a Medical Savings Account (MSA)?

The account that was formerly known as a Medical Savings Account (MSA) is the Health Savings Account (HSA). HSAs were introduced to enhance the benefits of MSAs, providing individuals with a tax-advantaged way to save for medical expenses.

HSAs are specifically designed for individuals with high-deductible health plans (HDHPs), allowing them to contribute pre-tax dollars that can be used for qualifying medical expenses. This makes HSAs a powerful tool for managing healthcare costs, as contributions grow tax-free and withdrawals for medical purposes are also tax-free.

The structure of HSAs encourages individuals to take a proactive approach to their healthcare spending, enabling them to save for future medical needs while enjoying immediate tax benefits. This aligns closely with the original intent of MSAs, but with enhanced flexibility and wider eligibility criteria, making HSAs a more accessible option for many.