Archer MSAs: Health Accounts and Taxes (2025 IRS Guide)

This guide covers “Archer MSAs” within health accounts and taxes. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Context for these rules

Archer MSAs were created to help self-employed individuals and employees of certain small employers meet the medical care costs of the account holder, the account holder’s spouse, or the account holder’s dependent(s).

A Medicare Advantage MSA is an Archer MSA designated by Medicare to be used solely to pay the qualified medical expenses of the account holder who is eligible for Medicare.

Archer MSAs

An Archer MSA is a tax-exempt trust or custodial account that you set up with a U.S. financial institution (such as a bank or an insurance company) in which you can save money exclusively for future medical expenses.

What are the benefits of an Archer MSA?

You may enjoy several benefits from having an Archer MSA.

• You can claim a tax deduction for contributions you make even if you don’t itemize your deductions on Schedule A (Form 1040) or Schedule A (Form 1040-NR). However, you may not claim a deduction if you are a dependent of another taxpayer.

• The interest or other earnings on the assets in your Archer MSA are tax free.

• Distributions may be tax free if you pay qualified medical expenses.

• The contributions remain in your Archer MSA until you use them.

• An Archer MSA is “portable,” so it stays with you if you change employers or leave the work force.

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 a self-only or family HDHP for you (or your spouse).

• A self-employed person (or the spouse of a self-employed person) who maintains a self-only 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.

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.

Growing employer.

A small employer may begin HDHPs and Archer MSAs for its employees and then grow beyond 50 employees. The employer will continue to meet the requirement for small employers if the employer:

• 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 the employer 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 to contribute to an Archer MSA, you must be covered under 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 HDHPs for 2025.

Family plans that don’t 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 don’t 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 less than the minimum annual deductible for family coverage, the plan doesn’t qualify as an HDHP.

Other health coverage.

If you (and your spouse, if you have family coverage) have HDHP coverage, you can’t generally have any other health coverage. However, you can still be an eligible individual even if your spouse has non-HDHP coverage, provided you aren’t 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.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans: Medical Savings Accounts (MSAs) — Archer MSAs — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.