A tax-free account for Medicare that very few people use

If you’re 65 and healthy, you may want to check out this Medicare plan, which includes a tax-favored savings account.

Say hello to the Medicare medical savings account or MSA.

Funds in an MSA accrue interest free of taxes. Beneficiaries can make tax-free withdrawals, provided the money is used for qualified medical costs. Maybe best of all: Medicare seeds the accounts with cash each year.

The account is a cousin of the health savings account, which you may know if you have a high-deductible health plan at work.

Despite its virtues, the Medicare MSA has a small following.

Out of about 19 million enrollees in Medicare Advantage, only 5,000 of them are in programs that use an MSA, according to Gretchen Jacobson, associate director with the Kaiser Family Foundation’s program on Medicare policy.

“It’s a great product if you have a beneficiary who is reasonably healthy and goes to the doctor just a couple times a year,” said A.J. Tate, director of Medicare product development at MVP Health Care, in Schenectady, New York.