Report Title:

Medical Savings Accounts

Description:

Authorizes private insurers, mutual benefit societies, and health maintenance organizations to offer high-deductible health insurance policies in conjunction with medical savings accounts in this State.

THE SENATE

S.B. NO.

1320

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO MEDICAL SAVINGS ACCOUNTS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Congress passed the Health Insurance Portability and Accountability Act of 1996 which created a pilot program for federal tax-free medical savings accounts. Medical savings accounts are tax-deferred savings accounts designated for health care. Deposits to a medical savings account, up to an established maximum, and the interest earned, are not taxed if used for qualified medical expenses. Funds withdrawn for other reasons are fully taxed as income, and in most cases, a penalty is imposed. Money remaining in the account at the end of the year may accumulate to pay future medical bills. Medical savings accounts operate in conjunction with a high-deductible health insurance policy. The money in the medical savings account may be used to pay for health-related costs not covered under the insurance policy.

The State tax code already recognizes medical savings accounts in section 235-2.4(f) but, as there is no mention of medical savings accounts in our statutes outside of the State tax code, there may be some confusion as to whether insurers are allowed to offer high-deductible health insurance policies in conjunction with medical savings accounts in this State. This Act resolves this issue and specifically allows private health insurers, mutual benefit societies, and health maintenance organizations to offer high-deductible health insurance policies in conjunction with medical savings accounts in this State.

SECTION 2. Chapter 431:10A, Hawaii Revised Statutes is amended by adding a new section to be appropriately designated and to read as follows:

"§431:10A- High-deductible contracts for medical savings accounts. An insurer may offer a high-deductible health insurance contract to employers or self-employeds that establish medical savings accounts, as defined in section 220 of the Internal Revenue Code."

SECTION 3. Chapter 432, Hawaii Revised Statutes is amended by adding a new section to be appropriately designated and to read as follows:

"§432- High-deductible contracts for medical savings accounts. A mutual benefit society may offer a high-deductible health insurance contract to employers or self-employeds that establish medical savings accounts, as defined in section 220 of the Internal Revenue Code."

SECTION 4. Chapter 432D, Hawaii Revised Statutes is amended by adding a new section to be appropriately designated and to read as follows:

"§432D- High-deductible contracts for medical savings accounts. A health maintenance organization may offer a high-deductible health insurance contract to employers or self-employeds that establish medical savings accounts, as defined in section 220 of the Internal Revenue Code."

SECTION 5. New statutory material is underscored.

SECTION 6. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 7. This Act shall take effect upon its approval.

INTRODUCED BY:

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BY REQUEST