An MSA (medical savings account) is similar to an HSA (health savings account) in that both require the account holder to be covered by a high-deductible health plan, or HDHP.
However, Archer MSAs differ from HSAs in a few key areas:
- Archer MSAs are restricted to self-employed individuals and small businesses with fewer than 50 employees
- Annual contributions to an MSA can be made by either the employer or by the account holder – not both
- MSA annual contribution limits are determined by the HDHP's deductible and taxpayer's income
