Merritt Personal Lines Manual: Qualifying for an Archer MSA
To qualify for an Archer MSA, you must be either of the following.
- An employee (or the spouse of an employee) of a small employer (defined later) that maintains an individual or family HDHP for you (or your spouse).
- A self-employed person (or the spouse of a self-employed person) who maintains an individual or family HDHP.
You can have no other health or Medicare coverage except what is permitted under Other health coverage, later. You must be an eligible individual on the first day of a given month to get an Archer MSA deduction for that month.
If another taxpayer is entitled to claim an exemption for you, you cannot claim a deduction for an Archer MSA contribution. This is true even if the other person does not actually claim your exemption.
Small employer. A small employer is generally an employer who had an average of 50 or fewer employees during either of the last 2 calendar years. The definition of small employer is modified for new employers and growing employers.
Growing employer. A small employer may begin HDHPs and Archer MSAs for his or her employees and then grow beyond 50 employees. The employer will continue to meet the requirement for small employers if he or she:
- Had 50 or fewer employees when the Archer MSAs began,
- Made a contribution that was excludable or deductible as an Archer MSA for the last year he or she had 50 or fewer employees, and
- Had an average of 200 or fewer employees each year after 1996.
Changing employers. If you change employers, your Archer MSA moves with you. However, you may not make additional contributions unless you are otherwise eligible.
High deductible health plan (HDHP). To be eligible for an Archer MSA, you must have an HDHP. An HDHP has:
- A higher annual deductible than typical health plans, and
- A maximum limit on the annual out-of-pocket medical expenses that you must pay for covered expenses.
Limits. The following table shows the limits for annual deductibles and the maximum out-of-pocket expenses for high deductible health plans for 2006.
| Type of Coverage | Minimum Annual Deductible | Maximum Annual Deductible | Maximum Annual Out-of-Pocket Expenses |
| Self-only | $1,800 | $2,700 | $3,650 |
| Family | $3,650 | $5,450 | $6,650 |
Family plans that do not meet the high deductible rules. There are some family plans that have deductibles for both the family as a whole and for individual family members. Under these plans, if you meet the individual deductible for one family member, you do not have to meet the higher annual deductible amount for the family. If either the deductible for the family as a whole or the deductible for an individual family member is below the minimum annual deductible for family coverage, the plan does not qualify as an HDHP.
You have family health insurance coverage in 2006. The annual deductible for the family plan is $4,500. This plan also has an individual deductible of $2,000 for each family member. The plan does not qualify as an HDHP because the deductible for an individual family member is below the minimum annual deductible ($3,650) for family coverage.
Other health coverage. You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. However, you can still be an eligible individual even if your spouse has non-HDHP coverage provided you are not covered by that plan. However, you can have additional insurance that provides benefits only for the following items.
- Liabilities incurred under workers compensation laws, torts, or ownership or use of property.
- A specific disease or illness.
- A fixed amount per day (or other period) of hospitalization. You can also have coverage (whether provided through insurance or otherwise) for the following items.
- Accidents.
- Disability.
- Dental care.
- Vision care.
- Long-term care.
