An Archer Medical Savings Account (MSA) is available to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The Archer MSA, a predecessor to the HSA under the pre-ACA consumer-directed health plan (CDHP) family, is available only to two groups: self-employed individuals and employees of small employers — and in both cases the person must be enrolled in a qualifying high-deductible health plan. Contributions enjoy tax advantages and withdrawals for qualified medical expenses are tax-free. The program is largely closed to new HSA-type growth, but the eligibility limits remain a tested CDHP fact. Only these two eligibility groups exist under the statute.
Why the other options are wrong
- B) Archer MSAs are restricted to the self-employed and small-employer settings; large-corporation employees are not eligible. The statute expressly limits the eligible classes to these two groups of working people.
- C) Medicare beneficiaries cannot contribute to an Archer MSA or HSA; these accounts require enrollment in a high-deductible plan. An Archer MSA cannot be combined with Medicare coverage at any time.
- D) An Archer MSA must be paired with a qualifying high-deductible health plan; having no insurance at all disqualifies the person. The high-deductible plan must be in place for the account to exist.
Memory hook
Archer MSA = the HSA's older sibling: self-employed or small employer only, always hitched to a high-deductible plan.