Which two areas are cited as concerns with MSAs?

• A. Pharmacy costs: MSA priced drugs at retail value; insurers negotiated price lower; Life expectancy: MSA based on claimant's actual age instead of 'rated age'.
• B. Tax considerations and investment risk.
• C. Administrative overhead and data privacy.
• D. Provider network restrictions and referral requirements.

Answer: (A)

MSAs are funded accounts meant to cover medical expenses, so the two most immediate concerns are about what actually drains those funds and how long the funds need to last. First, drug pricing directly affects how much of the MSA would be used on pharmacotherapy. If drugs are priced at retail value and the MSA must cover them, beneficiaries may face higher out-of-pocket costs or faster depletion of the funds. Insurers negotiating lower prices with pharmacies would help protect the MSA balance, so the discrepancy between retail pricing and negotiated prices is a real source of concern.

Second, the way life expectancy is used to size the MSA matters for sustainability. If the design bases the MSA on the claimant’s actual age rather than a rated or standardized age, the expected duration of benefits—and thus the required funds—changes. This affects how much money is needed upfront and over time to ensure the plan can cover anticipated medical expenses.

The other options touch on broader considerations like tax treatment or administrative burden, but the cited issues specifically highlight drug pricing within the MSA framework and the actuarial implications of life expectancy assumptions.