In general, to make contributions to an MSA you must not be covered by any health plan that is not a qualified high deductible health plan. However, you are permitted to have insurance for accidents, disability, dental care, vision care, and long-term care. You also may have a Medicare supplement plan, insurance for a specified disease or illness, insurance that pays a fixed amount per day of hospitalization, and workers' compensation or other liability insurance. Any interest earned on funds in the account is also excluded from gross income. In general, funds withdrawn from an MSA are also excluded from income if they are used to pay for qualified medical expenses for the account owner or a member of the owner's family.
Withdrawals made for other purposes are subject to federal income tax.
In general, you may contribute an amount equal to 65 percent of the deductible if you have single coverage and an amount equal to 75 percent of the deductible if you have family coverage. However, some additional rules may apply. Employees of small employers may not contribute more than they earn from that employer. In addition, individuals may not contribute to an MSA if their employers contribute on their behalf. In other words, either the individual or the employer may put money into the account, but not both.