BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  1

DATE:  February 19, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: SB -685

SPONSOR: Senator Rawson

BILL SHORT TITLE: Amending Medical Savings Account Provisions

DESCRIPTION: This bill amends 1995’s statutory implementation of the state’s medical care savings account program. The changes: (1) Payments may be made directly from the trust account to the health care provider, instead of the current procedure whereby the owner of the account pays the health care practitioner and then solicits a reimbursement from the trust. (2) Direct payment may be made by a debit card or check drawn on the employees account through the trust. (3) If an employee overspends from the account, or spends money on inappropriate services, the account administrator will demand the money be repaid into the account. (4) Any federal or state taxes and penalties incurred by inappropriate use of the employee’s account are the direct obligation of the employee and not the trust.

EFFECTIVE DATE: not stated – 90 days after adjournment (June 17)

FISCAL IMPACT: none. These changes are unlikely to make medical care savings accounts any more popular than at present. 

ADMINISTRATIVE IMPACT: The Department will continue to provide a means on the income tax return where an employee may claim the benefits of the tax exemption for contributions to a medical care savings account. If any accounts have been set up, they have been set up as part of a “cafeteria plan” of employee benefits. Money contributed by the employee is excluded from income under the plan and amounts contributed by the employer are not included in W-2 income. In any case, the Department has not processed a single claim of exclusion from tax under this program.

OTHER IMPACTS AND ISSUES:  none.