Question on Old MSA accts.

[Unregistered]

Client is filing a 2003 return. He is Self employed. He has a previously established MSA he made a contribution to. His wife works for a different employer. She is elilgible to buy insurance at her place of work but does not participate. Since she is eligilbe does this make them ineligible to do the MSA? Or is it only if she is actually covered by another plan?

[Bees Knees]

IRS Pub 969, page 9 says: “You (or your spouse if you file jointly) generally cannot have any other health coverage that is not an HDHP.” That tells me it is based on whether or not you actually have other coverage. I don’t see any language in that publication that disqualifies the MSA contribution for simply being eligible to participate in other coverage.

[Unregistered]

Thanks,
We read the same thing. Just wanted to make sure. It never stated that exactly.

[LCP]

IRS Pub 969, page 9 says: “You (or your spouse if you file jointly) generally cannot have any other health coverage that is not an HDHP.” That tells me it is based on whether or not you actually have other coverage. I don’t see any language in that publication that disqualifies the MSA contribution for simply being eligible to participate in other coverage.

The deduction for self-employed health insurance expense is based on eligibility I think.

Incidently, I'm looking for it in TTB and am a bit dissapointed in the lack of info.

[Bees Knees]

Incidently, I'm looking for it in TTB and am a bit dissapointed in the lack of info.

TTB, page 13-29, “Author’s Comment: …there seems to be no advantage of choosing an Archer MSA over an HSA. Qualifications for Archer MSAs are more strict, and deductible contributions and high deductible coverage are less attractive than the rules for HSAs. Taxpayers with existing Archer MSAs can roll their funds over into HSAs. Therefore, it is this author’s opinion that taxpayers should not even bother with Archer MSAs anymore.”

I think that was their polite way of saying you would be a fool not to make the switch over to an HSA. So why bother wasting paper covering a dead subject?

[Unregistered]

If I read it correctly, you can no longer do a MSA. You can keep going if you already have one. But, Now you must do a HSA.

[KJ Judd]

Wi - Hsa

I agree that you can't start an MSA now. Also want to point out that WI is not being cooperative. It doesn't recognize HSA as a deduction and interest earned is taxable for them. If you convert MSA to HSA in WI you have taxable income for WI purposes.