0001| HOUSE BILL 820
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0002| 43rd legislature - STATE OF NEW MEXICO - first session, 1997
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0003| INTRODUCED BY
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0004| BRETT D. JOHNSON
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0005|
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0006|
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0007|
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0008| FOR THE HEALTH CARE REFORM COMMITTEE
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0009|
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0010| AN ACT
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0011| RELATING TO INSURANCE; AMENDING THE MEDICAL CARE SAVINGS
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0012| ACCOUNT ACT TO COMPLY WITH FEDERAL LAW REQUIREMENTS; DECLARING
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0013| AN EMERGENCY.
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0014|
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0015| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0016| Section 1. Section 59A-23D-1 NMSA 1978 (being Laws 1995,
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0017| Chapter 93, Section 1) is amended to read:
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0018| "59A-23D-1. SHORT TITLE. [Sections 1 through 7 of this
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act] Chapter 59A, Article 23D NMSA 1978 may be cited as the
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0020| "Medical Care Savings Account Act"."
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0021| Section 2. Section 59A-23D-2 NMSA 1978 (being Laws 1995,
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0022| Chapter 93, Section 2) is amended to read:
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0023| "59A-23D-2. DEFINITIONS.--As used in the Medical Care
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0024| Savings Account Act:
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0025| A. "account administrator" means any of the
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0001| following that administers medical care savings accounts:
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0002| (1) a national or state chartered bank,
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0003| savings and loan association, savings bank or credit union;
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0004| (2) a trust company authorized to act as a
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0005| fiduciary in this state;
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0006| (3) an insurance company or health maintenance
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0007| organization authorized to do business in this state pursuant
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0008| to the [New Mexico] Insurance Code; or
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0009| [(4) an employer that has a self-insured
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health plan under the federal Employee Retirement Income
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Security Act of 1974;
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(5) a broker, agent or investment advisor;
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(6) a person who holds a certificate or
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registration as an insurance administrator or for whom the
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registration has been waived; or
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(7) an employer who participates in the
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medical care savings account program;]
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0018| (4) a person approved by the federal health
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0019| and human services secretary;
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0020| B. "deductible" means the total covered medical
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0021| expense [the] an employee or his dependents must pay prior
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0022| to any payment by [the] a qualified higher deductible
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0023| health plan for a calendar year;
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0024| C. "department" means the department of insurance;
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0025| D. "dependent" means:
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0001| (1) a spouse;
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0002| (2) an unmarried or unemancipated child of the
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0003| employee who is a minor and who is:
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0004| (a) a natural child;
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0005| (b) a legally adopted child;
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0006| (c) a stepchild living in the same
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0007| household who is primarily dependent on the employee for
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0008| maintenance and support;
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0009| (d) a child for whom the employee is the
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0010| legal guardian and who is primarily dependent on the employee
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0011| for maintenance and support, as long as evidence of the
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0012| guardianship is evidenced in a court order or decree; or
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0013| (e) a foster child living in the same
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0014| household, if the child is not otherwise provided with health
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0015| care or health insurance coverage;
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0016| (3) an unmarried child described in
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0017| Subparagraphs (a) through (e) of Paragraph (2) of this
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0018| subsection who is between the ages of eighteen and twenty-five
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0019| and is a full-time student at an accredited educational
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0020| institution; provided, "full-time student" means a student is
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0021| enrolled in and taking twelve or more semester hours or
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0022| equivalent contact hours in secondary, undergraduate or
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0023| vocational school or nine or more semester hours or equivalent
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0024| contact hours in graduate school; or
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0025| (4) a child over the age of eighteen who is
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0001| incapable of self-sustaining employment by reason of mental
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0002| retardation or physical handicap and who is chiefly dependent
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0003| on the employee for support and maintenance;
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0004| E. "eligible individual" means an individual who
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0005| with respect to any month:
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0006| (1) is covered under a qualified higher
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0007| deductible health plan as of the first day of that month;
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0008| (2) is not, while covered under a qualified
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0009| higher deductible health plan, covered under any health plan
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0010| that:
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0011| (a) is not a qualified higher deductible
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0012| health plan; and
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0013| (b) provides coverage for any benefit
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0014| that is covered under the qualified higher deductible health
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0015| plan; and
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0016| (3) is covered by a qualified higher
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0017| deductible health plan that is established and maintained by
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0018| the employer of the individual or of the spouse of the
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0019| individual when the employer is a small employer;
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0020| [E.] F. "eligible medical expense" means an
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0021| expense paid by the employee for medical care described in
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0022| Section 213(d) of the Internal Revenue Code of 1986 that is
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0023| deductible for federal income tax purposes to the extent that
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0024| those amounts are not compensated for by insurance or
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0025| otherwise;
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0001| [F.] G. "employee" includes a self-employed
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0002| individual;
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0003| [G.] H. "employer" includes a self-employed
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0004| individual;
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0005| [H.] I. "medical care savings account" or
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0006| "savings account" means an account established by an employer
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0007| [to pay the eligible medical expenses of an employee and his
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dependents] in the United States exclusively for the purpose
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0009| of paying the eligible medical expenses of the employee, but
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0010| only if the written governing instrument creating the trust
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0011| meets the following requirements:
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0012| (1) except in the case of a rollover
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0013| contribution, no contribution will be accepted:
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0014| (a) unless it is in cash; or
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0015| (b) to the extent the contribution, when
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0016| added to previous contributions to the trust for the calendar
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0017| year, exceeds seventy-five percent of the highest annual limit
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0018| deductible permitted pursuant to the Medical Care Savings
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0019| Account Act;
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0020| (2) no part of the trust assets will be
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0021| invested in life insurance contracts;
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0022| (3) the assets of the trust will not be
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0023| commingled with other property except in a common trust fund or
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0024| common investment fund; and
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0025| (4) the interest of an individual in the
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0001| balance in his account is nonforfeitable;
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0002| [I.] J. "program" means the medical care
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0003| savings account program established by an employer for his
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0004| employees; [and
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J.] K. "qualified higher deductible health plan"
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0006| means a health coverage policy, certificate or contract that
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0007| provides for payments for covered health care benefits that
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0008| exceed the policy, certificate or contract deductible [and],
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0009| that is purchased by an employer for the benefit of an employee
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0010| and that has the following deductible provisions:
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0011| (1) self only coverage with an annual
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0012| deductible of not less than one thousand five hundred dollars
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0013| ($1,500) or more than two thousand two hundred fifty dollars
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0014| ($2,250) and a maximum annual out-of-pocket expense requirement
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0015| of three thousand dollars ($3,000), not including premiums;
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0016| (2) family coverage with an annual deductible
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0017| of not less than three thousand dollars ($3,000) or more than
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0018| four thousand five hundred dollars ($4,500) and a maximum
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0019| annual out-of-pocket expense requirement of five thousand five
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0020| hundred dollars ($5,500), not including premiums; and
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0021| (3) preventive care coverage may be provided
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0022| within the policies without the preventive care being subjected
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0023| to the qualified higher deductibles; and
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0024| L. "small employer" means:
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0025| (1) with respect to any calendar year, an
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0001| employer that employed an average of fifty or fewer employees
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0002| on business days during either of the two preceding calendar
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0003| years, but a preceding calendar year may be taken into account
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0004| only if the employer was in existence throughout that year and
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0005| if not in existence throughout a preceding calendar year, the
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0006| determination shall be based on the average number of employees
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0007| reasonably expected to be employed on business days in the
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0008| current calendar year; or
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0009| (2) a growing employer that satisfies the
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0010| conditions of Section 220C(4)(c) of the Internal Revenue Code
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0011| of 1986."
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0012| Section 3. Section 59A-23D-3 NMSA 1978 (being Laws 1995,
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0013| Chapter 93, Section 3) is amended to read:
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0014| "59A-23D-3. ACCOUNT ADMINISTRATOR--REGISTRATION WITH
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0015| DEPARTMENT--DEPARTMENT POWERS AND DUTIES.--
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0016| A. An account administrator shall register
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0017| annually with the department and pay [a] an annual
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0018| registration fee of twenty-five dollars ($25.00). The
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0019| registration fee shall be deposited in the general fund.
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0020| Registration as an account administrator does not affect the
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0021| regulation of a bank, savings and loan association, credit
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0022| union, trust company or insurance company as otherwise provided
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0023| by law.
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0024| B. An account administrator shall provide to the
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0025| department annually a list of the employers for whom it
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0001| provides account administration and the number of employees and
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0002| dependents for whom it administers accounts. The information
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0003| shall be provided in the form requested by the department. The
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0004| department may request other information it deems appropriate
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0005| from the account administrator; provided, however, that the
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0006| department shall not request any information about an
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0007| individual employee or dependent unless a complaint has been
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0008| filed with the department by that employee or dependent and the
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0009| information is required to investigate the complaint.
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0010| C. The department may receive, investigate and
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0011| settle complaints about medical care savings accounts and
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0012| account administrators or it may refer complaints to other
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0013| appropriate agencies.
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0014| D. The department, beginning January 1, 1998,
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0015| shall adjust annually the [maximum] deductible for qualified
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0016| higher deductible health plans to reflect the [last known
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increase in the medical care component of the consumer price
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index published by the United States department of labor. For
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1995, the maximum deductible shall not be less than one
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thousand dollars ($1,000) and not more than three thousand
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dollars ($3,000)] adjustment allowed by the Internal Revenue
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0022| Code of 1986 for medical savings accounts.
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0023| [E. The department may adjust annually the maximum
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employer contribution to reflect the last known increase in the
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medical care component of the consumer price index. For 1995,
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the employer's contribution shall not exceed three thousand
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dollars ($3,000).]"
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0003| Section 4. Section 59A-23D-5 NMSA 1978 (being Laws 1995,
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0004| Chapter 93, Section 5) is amended to read:
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0005| "59A-23D-5. ACCOUNT ADMINISTRATOR--EMPLOYER AND EMPLOYEE
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0006| RESPONSIBILITIES.--
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0007| A. [The] An employer, in conjunction with
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0008| [the] an account administrator, shall provide a current
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0009| written statement to employees that details how money in their
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0010| medical care savings accounts is or will be invested and the
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0011| rate of return employees may reasonably anticipate on the
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0012| investment of the savings accounts. The account administrator
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0013| shall file the statement with the department.
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0014| B. Except as provided in Section [6 of this act]
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0015| 59A-23D-6 NMSA 1978, money in [the] a savings account
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0016| shall be used solely for the purpose of paying the eligible
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0017| medical expenses of [the] an employee and his dependents.
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0018| C. The account administrator shall reimburse the
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0019| employee from the employee's medical care savings account for
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0020| eligible medical expenses. When seeking reimbursement, the
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0021| employee shall submit documentation of eligible medical
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0022| expenses paid by the employee.
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0023| D. If an employer makes contributions to a program
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0024| on a periodic installment basis, the employer may advance to an
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0025| employee, interest free, an amount necessary to cover eligible
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0001| medical expenses incurred that exceed the amount in the
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0002| employee's savings account if the employee agrees to repay the
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0003| advance from future installments or when he ceases to be an
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0004| employee of the employer or a participant in the program. Such
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0005| advances shall be exempt from taxation under the Income Tax
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0006| Act."
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0007| Section 5. Section 59A-23D-6 NMSA 1978 (being Laws 1995,
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0008| Chapter 93, Section 6) is amended to read:
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0009| "59A-23D-6. WITHDRAWALS.--
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0010| A. An employee may withdraw money without penalty
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0011| from his medical care savings account for a purpose other than
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0012| reimbursement of eligible medical expenses [when he reaches
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the age of fifty-nine and one-half] when the employee attains
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0014| the age specified in Section 1811 of the Social Security Act.
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0015| An employee may also withdraw money without penalty for payment
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0016| of coverage for:
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0017| (1) a health plan during any period of
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0018| continuation coverage required under any federal law;
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0019| (2) a qualified long-term care insurance
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0020| contract as defined by Section 7702B(6) of the Internal Revenue
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0021| Code of 1986; or
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0022| (3) a health plan during a period in which the
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0023| individual is receiving unemployment compensation under any
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0024| federal or state law.
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0025| B. Except as provided in Subsection A of this
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0001| section, if an employee withdraws money from the employee's
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0002| medical care savings account [on the last business day of the
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account administrator's business year for a purpose not set
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forth in Section 4 of the Medical Care Savings Account Act the
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money withdrawn shall be considered income to the individual,
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subject to taxation. The withdrawal does not subject the
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employee to a penalty or make interest earned on the account
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during the tax year taxable as income to the employee] that
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0009| is not used exclusively to pay eligible medical expenses of the
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0010| employee or a dependent, it shall be included in the gross
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0011| income of the employee for taxation purposes.
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0012| C. Except as provided in Subsection A of this
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0013| section, if an employee withdraws money from the employee's
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0014| medical care savings account for a purpose [not set forth in
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Section 4 of the Medical Care Savings Account Act at any time
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other than the last business day of the account administrator's
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business year] other than a rollover to a new account
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0018| administrator:
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0019| (1) the amount of the withdrawal shall be
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0020| considered gross income to the [individual] employee and
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0021| subject to taxation; and
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0022| (2) the administrator shall [withdraw and]
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0023| also consider as a withdrawal on behalf of the employee
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0024| [pay] a penalty equal to [ten] fifteen percent of the
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0025| amount of the withdrawal and
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0001| [(3) all interest earned on the balance in
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the savings account during the tax year in which the withdrawal
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is made shall be considered income to the individual and
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subject to taxation] shall consider this as gross income to
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0005| the employee for taxation purposes.
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0006| D. If an individual is no longer employed by an
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0007| employer that participates in a program or if an employee
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0008| chooses to cease participating in the program, the individual
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0009| or employee shall, within sixty days of his final day of
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0010| employment or participation:
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0011| (1) request, in writing, the [transfer]
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0012| rollover of his savings account to a new account
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0013| administrator;
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0014| (2) request, in writing, that the former
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0015| employer's account administrator continue to administer the
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0016| savings account, including in the request an agreement to pay
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0017| the cost, if any, of account administration on that savings
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0018| account; or
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0019| (3) withdraw the money from the savings
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0020| account subject to the provisions of Subsection C of this
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0021| section, if the withdrawal is not for the purpose of a rollover
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0022| when within sixty days of the receipt of the funds they are
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0023| placed with a new account administrator.
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0024| E. No more than [thirty days after the expiration
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of the sixty-day period] sixty days after the date of
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0001| notification by the employee pursuant to Subsection D of this
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0002| section, the account administrator shall:
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0003| (1) transfer the savings account to a new
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0004| account administrator as requested;
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0005| (2) agree, in writing, to continue to act as
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0006| the account administrator for the savings account; or
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0007| (3) mail a check to the individual or employee
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0008| at his last known address for the amount in the account as of
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0009| the day the check was issued [excluding the applicable
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withdrawal penalty. The penalty shall be paid to the human
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services department at the same time as the individual's or
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employee's check is issued].
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0013| F. Upon the death of an employee, the account
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0014| administrator shall distribute the principal and accumulated
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0015| interest of the savings account to the estate of the employee."
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0016| Section 6. Section 59A-23D-7 NMSA 1978 (being Laws 1995,
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0017| Chapter 93, Section 7) is amended to read:
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0018| "59A-23D-7. REPORT.--
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0019| A. The superintendent [of insurance] shall
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0020| report to the legislature on or before December 1, 1999 on the
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0021| availability of health care coverage pursuant to the Medical
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0022| Care Savings Account Act and the market share of programs in
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0023| comparison with traditional employer-provided health insurance
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0024| programs; the results of a survey of employer and employee
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0025| satisfaction with programs; and the results of a loss ratio
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0001| study relative to programs.
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0002| B. The superintendent shall adopt and promulgate
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0003| regulations for enforcing and administering the provisions of
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0004| the Medical Care Savings Account Act."
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0005| Section 7. EMERGENCY.--It is necessary for the public
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0006| peace, health and safety that this act take effect immediately.
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0007|
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0008|
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0009| State of New Mexico
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0010| House of Representatives
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0011|
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0012| FORTY-THIRD LEGISLATURE
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0013| FIRST SESSION, 1997
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0014|
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0015|
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0016| February 25, 1997
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0017|
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0018|
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0019| Mr. Speaker:
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0020|
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0021| Your CONSUMER AND PUBLIC AFFAIRS COMMITTEE, to
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0022| whom has been referred
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0023|
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0024| HOUSE BILL 820
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0025|
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0001| has had it under consideration and reports same with
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0002| recommendation that it DO PASS, and thence referred to the
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0003| JUDICIARY COMMITTEE.
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0004|
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0005| Respectfully submitted,
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0006|
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0007|
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0008|
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0009|
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0010|
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0011| Gary King, Chairman
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0012|
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0013|
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0014| Adopted Not Adopted
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0015|
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0016| (Chief Clerk) (Chief Clerk)
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0017|
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0018| Date
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0019|
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0020| The roll call vote was 7 For 0 Against
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0021| Yes: 7
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0022| Excused: Rios, Sandel, Vigil
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0023| Absent: None
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0024|
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0025|
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0001| G:\BILLTEXT\BILLW_97\H0820 State of New Mexico
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0002| House of Representatives
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0003|
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0004| FORTY-THIRD LEGISLATURE
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0005| FIRST SESSION, 1997
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0006|
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0007|
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0008| March 10, 1997
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0009|
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0010|
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0011| Mr. Speaker:
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0012|
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0013| Your JUDICIARY COMMITTEE, to whom has been referred
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0014|
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0015| HOUSE BILL 820
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0016|
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0017| has had it under consideration and reports same with
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0018| recommendation that it DO PASS, amended as follows:
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0019|
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0020| 1. On page 4, lines 18 and 19, strike "when the employer is
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0021| a small employer".
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0022|
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0023| 2. On page 5, line 8, after "employee" insert "or
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0024| dependent".
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0025|
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0001| 3. On page 6, line 3, remove bracket and line through "and"
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0002| and on line 4 insert an opening bracket before "J.".
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0003|
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0004| 4. On page 6, line 22, strike "; and" and insert a period
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0005| and closing quotation mark.
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0006|
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0007| 5. On page 6, strike lines 23 through 25 and on page 7,
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0008| strike lines 1 through 10.
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0009|
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0010| Respectfully submitted,
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0011|
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0012|
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0013|
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0014|
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0015|
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0016| Thomas P. Foy, Chairman
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0017|
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0018|
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0019| Adopted Not Adopted
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0020|
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0021| (Chief Clerk) (Chief Clerk)
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0022|
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0023| Date
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0024|
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0025| The roll call vote was 11 For 0 Against
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0001| Yes: 11
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0002| Excused: King, Rios
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0003| Absent: None
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0004|
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0005|
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0006| .118068.1
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0007| G:\BILLTEXT\BILLW_97\H0820
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0008|
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0009| FORTY-THIRD LEGISLATURE
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0010| FIRST SESSION, 1997
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0011|
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0012|
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0013| March 16, 1997
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0014|
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0015| Mr. President:
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0016|
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0017| Your PUBLIC AFFAIRS COMMITTEE, to whom has been
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0018| referred
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0019|
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0020| HOUSE BILL 820, as amended
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0021|
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0022| has had it under consideration and reports same with
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0023| recommendation that it DO PASS.
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0024|
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0025| Respectfully submitted,
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0001|
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0002|
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0003|
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0004|
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0005| __________________________________
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0006| Shannon Robinson, Chairman
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0007|
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0008|
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0009|
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0010| Adopted_______________________ Not
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0011| Adopted_______________________
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0012| (Chief Clerk) (Chief Clerk)
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0013|
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0014|
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0015| Date ________________________
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0016|
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0017|
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0018| The roll call vote was 5 For 0 Against
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0019| Yes: 5
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0020| No: 0
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0021| Excused: Adair, Boitano, Vernon, Smith
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0022| Absent: None
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0023|
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0024|
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0025|
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0001|
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0002| H0820PA1
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