An Archer Medical Savings Account (MSA) is available to:

Why A is correct

The Archer MSA is a predecessor to the HSA and is limited to two groups: self-employed individuals and employees of small employers who purchase a qualifying high-deductible health plan. Money in the MSA can accumulate tax-free and be used to pay qualified medical expenses. Because the product is a consumer-driven health plan option studied under AH-III.A.1b, the exam tests which populations are eligible and how the high-deductible requirement anchors the arrangement's tax treatment.

Why the other options are wrong

• B) Archer MSAs are not a Medicare benefit; Medicare beneficiaries use Part A/B/C/D or Medigap instead.
• C) A low-deductible PPO does not satisfy the high-deductible plan requirement, and the MSA was not designed for employees of large employers.
• D) Eligibility is restricted to the self-employed or employees of small employers with an eligible high-deductible plan, not to every taxpayer.

Memory hook

Archer MSA: small employer or self-employed plus high deductible, that is it.

Why A is correct

An Archer MSA is a tax-advantaged account created by federal law for a narrow class of users: self-employed individuals and employees of small employers, and only when they are covered by a high-deductible health plan (HDHP) that meets statutory requirements. The Archer MSA predates the more widely available Health Savings Account and was designed to give the self-employed and small businesses a way to save for medical costs while keeping premiums affordable through a high deductible. Because this restricted eligibility is the defining feature of the Archer MSA, option A is the correct statement.

Why the other options are wrong

• B) Merely having access to a cafeteria plan does not qualify a person for an Archer MSA; the individual must be self-employed or with a small employer and must actually be covered by a qualifying high-deductible plan.
• C) Archer MSAs are not a Medicare product; prescription drug coverage for Medicare beneficiaries is provided through Part D plans, not through an Archer MSA. The two programs serve entirely different populations and purposes and are not interchangeable.
• D) Medicaid cost sharing is a benefit of the public Medicaid program for low-income residents who meet income and categorical eligibility rules, which is completely separate from the privately funded Archer MSA.

Memory hook

Archer MSA = the boss's own savings stash: self-employed or small-firm plus high-deductible, nothing else.