PRIOR PRINTER'S NO. 99 PRINTER'S NO. 1493
No. 107 Session of 2005
INTRODUCED BY PAYNE, BALDWIN, BASTIAN, BIRMELIN, BOYD, BROWNE,
BUNT, CAPPELLI, CAUSER, CRAHALLA, CREIGHTON, DALEY, DALLY,
DENLINGER, ELLIS, FAIRCHILD, FLEAGLE, GILLESPIE, GINGRICH,
HARHART, HARPER, HARRIS, HENNESSEY, HERMAN, HUTCHINSON,
JAMES, KILLION, LEH, MAHER, MAITLAND, MAJOR, S. MILLER,
RAYMOND, READSHAW, REICHLEY, SATHER, SCAVELLO, SCHRODER,
T. STEVENSON, TIGUE, TURZAI, WATSON, WILT, YUDICHAK, KENNEY,
PICKETT, PALLONE, REED, GERGELY, BARRAR, ARMSTRONG, NICKOL
AND KAUFFMAN, JANUARY 25, 2005
AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, APRIL 4, 2005
AN ACT
1 Authorizing the establishment and maintenance of health savings
2 accounts; providing an exclusion from State income tax; and
3 imposing restrictions on health savings accounts.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Health
8 Savings Account Act.
9 Section 2. Legislative intent.
10 It is the intent of the General Assembly to extend SPECIAL <--
11 TAX PROVISIONS to health savings accounts established pursuant
12 to section 223 of the Internal Revenue Code of 1986 (Public Law
13 99-514, 26 U.S.C. § 223) an exclusion from State income tax. <--
14 Section 3. Definitions.
1 The following words and phrases when used in this act shall
2 have the meanings given to them in this section unless the
3 context clearly indicates otherwise:
4 "EXCESS CONTRIBUTION DISTRIBUTION." A DISTRIBUTION DESCRIBED <--
5 IN SECTION 223(F)(3) OF THE INTERNAL REVENUE CODE OF 1986
6 (PUBLIC LAW 99-514, 26 U.S.C. § 223(F)(3)). THE TERM SHALL NOT
7 INCLUDE AMOUNTS OF INCOME ATTRIBUTABLE TO SUCH DISTRIBUTION.
8 "Health insurance policy." An individual or group health,
9 sickness or accident policy or subscriber contract or
10 certificate issued by an entity subject to any one of the
11 following:
12 (1) The act of May 17, 1921 (P.L.682, No.284), known as
13 The Insurance Company Law of 1921.
14 (2) The act of December 29, 1972 (P.L.1701, No.364),
15 known as the Health Maintenance Organization Act.
16 (3) The act of May 18, 1976 (P.L.123, No.54), known as
17 the Individual Accident and Sickness Insurance Minimum
18 Standards Act.
19 (4) 40 Pa.C.S. Ch. 61 (relating to hospital plan
20 corporations) or 63 (relating to professional health services
21 plan corporations).
22 "Health savings account." As defined in section 223(d) of
23 the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
24 § 223(d)).
25 "Qualified medical expenses." As defined in section 223(d)
26 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
27 U.S.C. § 223(d)).
28 Section 4. State income tax exclusion.
29 (a) General rule.--Any increase in the value COVERAGE UNDER <--
30 A HEALTH SAVINGS ACCOUNT, ANY INCOME of a health savings
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1 account, ANY EXCESS CONTRIBUTION DISTRIBUTION AND any payment or <--
2 distribution from a health savings account that is used
3 exclusively to pay qualified medical expenses and money
4 reimbursed to an account holder or an employee for qualified
5 health expenses shall be excluded from taxation under Article
6 III of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
7 Reform Code of 1971.
8 (b) Nonqualified payments or distributions.--A payment or
9 distribution from a health savings account that is used for any
10 purpose other than to pay qualified medical expenses shall be
11 included in income THE INCOME OF THE ACCOUNT HOLDER under <--
12 Article III of the Tax Reform Code of 1971 to the extent that
13 the amounts paid or distributed were not previously included in
14 income. The cost recovery method shall be used to determine the
15 portion of the payment or distribution to be included in income.
16 Section 5. Mandated benefits.
17 (a) General rule.--A health insurance policy that would
18 qualify as a high deductible health plan under section 223(c)(2)
19 of the Internal Revenue Code of 1986 (Public Law 99-514, 26
20 U.S.C. § 223(c)(2)) shall be subject to any provision of law
21 mandating a minimum health insurance benefit or reimbursement.
22 (b) Construction.--Nothing in this act shall be construed to
23 prohibit or prevent a health insurance policy that would qualify
24 as a high deductible health plan under section 223(c)(2) of the
25 Internal Revenue Code of 1986 from applying deductibles or
26 copayments to benefits offered under these mandated minimum
27 health insurance benefits.
28 Section 6. Applicability.
29 Section 4 shall apply to taxable years beginning after
30 December 31, 2004.
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1 Section 7. Effective date.
2 This act shall take effect in 60 days.
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