medical savings accounts;
state employees
X |
Committee on Retirement & Government Operations |
|
|
|
Committee on Financial Institutions & Insurance |
|
|
|
Caucus and COW |
|
|
|
As Passed the House |
|
HB 2045 requires the Department of Administration (DOA) to approve all medical savings account (MSA) programs for all full-time state employees and officers and its departments and agencies, under set conditions.
Current law authorizes any resident of the state to establish an MSA. An MSA is a tax-advantaged non-profit account intended for medical expenses, offering a tax shelter, provider choices, long-term care protection and control over account money. Statute authorizes annual deposits from individuals or employers up to $2,000 per individual and an additional $1,000 for each dependent up to a maximum of $4000 (adjusted to the GDP price deflator). Individual MSA contributions are deductible for income tax purposes and withdrawals for eligible medical expenses are not subject to taxation. Withdrawals for other purposes are considered income, to be taxed accordingly and subject to a 10% penalty, unless made on the last day of the year.
A Voluntary Employee Benefits Association (VEBA) is a tax-exempt trust, which enables employers to make deposits into an account on behalf of employees, enabling them to obtain tax-free reimbursements for medical expenses and insurance premium deposits.
During the 2000 interim, the Ad hoc Joint Medical Savings Account Task Force Study Committee met and studied the performance of MSA programs and how they have been administered in Arizona and any other issues regarding MSA programs. The committee was charged with the task to recommend the best method to administer a state MSA program. This legislation is a result of the recommendations of the task force.