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PAG LIN
1 1 Section 1. Section 422.7, Code 1995, is amended by adding
1 2 the following new subsection:
1 3 NEW SUBSECTION. 32. Subtract, to the extent not otherwise
1 4 deducted in computing adjusted gross income, the amounts paid
1 5 by the taxpayer for the purchase of health insurance for the
1 6 taxpayer or taxpayer's spouse or dependent. This section does
1 7 not apply to the extent the amounts paid are from a family
1 8 health account for which the taxpayer received tax benefits.
1 9 Sec. 2. Section 422.7, Code 1995, is amended by adding the
1 10 following new subsections:
1 11 NEW SUBSECTION. 33. Subtract up to one thousand eight
1 12 hundred dollars contributed by the individual, the
1 13 individual's employer, or a public agency, in the aggregate to
1 14 a family health account for the individual, or up to four
1 15 thousand two hundred dollars contributed by the individual,
1 16 the individual's employer, or a public agency, in the
1 17 aggregate to a family health account for the individual and
1 18 the individual's spouse and dependents. However, the amount
1 19 to be subtracted shall be reduced, but not below zero, by the
1 20 amount of health insurance premiums paid by the taxpayer's
1 21 employer covering the taxpayer or the taxpayer's spouse or
1 22 dependent which premiums were not subject to state income tax.
1 23 The deduction for contributions to a family health account is
1 24 allowed if the net income is forty thousand dollars or less in
1 25 the case of a married individual, an unmarried head of
1 26 household, or a surviving spouse or the net income is thirty
1 27 thousand dollars or less in the case of all other persons. In
1 28 the case of a married individual, the combined net income of
1 29 both spouses shall be considered.
1 30 NEW SUBSECTION. 34. Subtract to the extent included,
1 31 interest earned in the tax year on a family health account
1 32 unless the interest is withdrawn and not used for any of the
1 33 approved purposes described in section 505.22, subsection 1,
1 34 paragraph "f".
1 35 NEW SUBSECTION. 35. Add to the extent not included,
2 1 amounts withdrawn from a family health account which were not
2 2 used for any of the approved purposes described in section
2 3 505.22, subsection 1, paragraph "f", and which represent tax
2 4 benefits previously taken by the individual.
2 5 Sec. 3. Section 422.9, subsection 2, Code 1995, is amended
2 6 by adding the following new paragraph:
2 7 NEW PARAGRAPH. i. In determining the amount of the deduc-
2 8 tion for medical care under section 213(a) of the Internal
2 9 Revenue Code or for health insurance costs of self-employed
2 10 individuals under section 162(l) of the Internal Revenue Code,
2 11 the purchase of health insurance for which a deduction was
2 12 taken under section 422.7, subsection 32, shall not be
2 13 included.
2 14 Sec. 4. NEW SECTION. 505.22 FAMILY HEALTH ACCOUNT
2 15 AUTHORIZED.
2 16 1. A financial instrument known as the family health
2 17 account is established. A family health account shall have
2 18 all of the following characteristics:
2 19 a. The account is kept in the name of the individual, the
2 20 individual's spouse, or the individual's dependent.
2 21 b. Deposits of up to one thousand eight hundred dollars
2 22 for an individual and four thousand two hundred dollars for an
2 23 individual and the individual's spouse or dependents can be
2 24 made to the family health account in the year.
2 25 c. The account earns income or interest.
2 26 d. In the case of death of an individual with a family
2 27 health account, the balance can be transferred to the account
2 28 of the spouse or dependent or an account can be set up for the
2 29 spouse or dependent. The balance of an individual's family
2 30 health account that transfers to the spouse or dependent at
2 31 the time of death is not subject to the state inheritance tax.
2 32 e. A family health account may be used for any of the
2 33 following purposes and payments from the account are
2 34 restricted to the following:
2 35 (1) To receive subsidies from the state or federal
3 1 government to assure access to health insurance or health
3 2 care.
3 3 (2) To receive contributions from employers and others on
3 4 a tax-exempt basis to the extent otherwise permitted by state
3 5 and federal income tax law.
3 6 (3) To receive deposits of pretax income to provide a
3 7 savings vehicle for future insurance premium, copayment, and
3 8 deductible requirements.
3 9 (4) To accrue interest income on a tax-exempt or tax-
3 10 deferred basis to the extent otherwise permitted by state and
3 11 federal income tax law.
3 12 (5) To purchase a private health plan from an insurer,
3 13 health maintenance organization, or organized delivery system
3 14 authorized to do business in Iowa, either directly or through
3 15 a health insurance purchasing cooperative.
3 16 (6) To participate in an employer-sponsored health benefit
3 17 plan.
3 18 (7) To exercise rights through an employer-sponsored
3 19 health benefit plan provided under the federal Consolidated
3 20 Omnibus Budget Reconciliation Act of 1986.
3 21 (8) To make payments to health care providers necessary to
3 22 satisfy copayment or deductible requirements under a health
3 23 plan.
3 24 (9) To make payments to licensed health care providers.
3 25 (10) To make payments for necessary and appropriate long-
3 26 term care services, and long-term care insurance coverage
3 27 approved by the commissioner.
3 28 f. Amounts withdrawn for any of the following approved
3 29 purposes do not result in income to the holder of a family
3 30 health account:
3 31 Payment of costs identified under paragraph "e",
3 32 subparagraphs (5), (6), (7), (8), (9), and (10), for the
3 33 individual, the individual's spouse, and the individual's
3 34 dependent to the extent that the expenditures qualify for the
3 35 deduction for medical care under section 213(a) of the
4 1 Internal Revenue Code without regard to whether the
4 2 expenditures exceed seven and one-half percent of the
4 3 individual's federal adjusted gross income. However, any
4 4 expenditure for an approved purpose which is paid from the
4 5 family health account shall not be deducted as a medical
4 6 expense under section 422.9, subsection 2, or as health
4 7 insurance costs of self-employed individuals under section
4 8 162(1) of the Internal Revenue Code.
4 9 g. A financial institution holding a family health account
4 10 shall make an annual report to the department of revenue and
4 11 finance on contributions and withdrawals to the account in the
4 12 year pursuant to rules of the department.
4 13 h. A financial institution administering a family health
4 14 account shall be able to process claims against the account
4 15 electronically subject to reasonable terms and conditions as
4 16 determined by the insurance division and consistent with the
4 17 requirements of the community health management information
4 18 system.
4 19 i. If an individual makes a withdrawal from the
4 20 individual's family health account in the tax year and the
4 21 withdrawal is not for one of the purposes described in
4 22 paragraph "f", a civil penalty of ten percent shall be imposed
4 23 on the amount withdrawn pursuant to rules of the department.
4 24 2. As a condition of maintaining a family health account
4 25 the individual or family must secure and maintain a health
4 26 benefit plan. The plan must provide for copayments,
4 27 deductibles, or out-of-pocket maximums consistent with the
4 28 average balance of the family health account.
4 29 3. As used in this section, unless the context otherwise
4 30 requires:
4 31 a. "Account holder" means an individual for whose benefit
4 32 a family health account is established.
4 33 b. "Dependent" means the same as defined in section 152 of
4 34 the Internal Revenue Code.
4 35 c. "Financial institution" means a private insurer, health
5 1 maintenance organization, organized delivery system, health
5 2 insurance purchasing cooperative, or a financial institution
5 3 approved by the insurance division as an investment mechanism
5 4 for family health accounts and licensed to do business in this
5 5 state.
5 6 d. "Internal Revenue Code" means the same as defined in
5 7 section 422.3.
5 8 Sec. 5. Section 513B.37, subsection 1, paragraph a, Code
5 9 1995, is amended to read as follows:
5 10 a. What benefits or direct pay requirements must be
5 11 minimally included in a basic or standard benefit coverage
5 12 policy or subscription contract.
5 13 Sec. 6. NEW SECTION. 513B.44 INDIVIDUAL HEALTH PLAN
5 14 PREMIUM CREDIT.
5 15 1. The division shall adopt rules to implement and
5 16 administer the premium credit authorized by this section,
5 17 which rules shall include the minimum standard application
5 18 form for premium credit eligibility. Forms shall be printed
5 19 by participating insurance companies or health insurance
5 20 purchasing cooperatives and provided to individuals wishing to
5 21 apply for premium credit eligibility.
5 22 2. The amount of the premium credit is equal to twenty-
5 23 five dollars per month, per participating eligible individual
5 24 or fifty dollars per month per eligible family purchasing a
5 25 health plan from an insurer, health maintenance organization,
5 26 or organized delivery system authorized to do business in this
5 27 state, whether purchased directly or through a health
5 28 insurance purchasing cooperative.
5 29 3. An individual or family is eligible for participation
5 30 in the subsidized insurance premium credit health insurance
5 31 plan if the family income is less than or equal to one hundred
5 32 fifty percent of the federal poverty level as published
5 33 annually in the federal register by the United States
5 34 department of health and human services. An application for
5 35 eligibility is valid for up to one year. Notwithstanding the
6 1 income requirement of this subsection, the division by rule
6 2 may increase the income limitation for the purpose of
6 3 increasing the number of eligible individuals and families to
6 4 assure that the premium credit is fully utilized to the extent
6 5 authorized in this section.
6 6 4. The earned premium credit is limited to the first full-
6 7 year equivalent participating eligible applications submitted
6 8 under this section preapproved by the division in any single
6 9 fiscal year, which request in the aggregate four million five
6 10 hundred thousand dollars in earned premium credit.
6 11 5. The carrier shall credit to the participating
6 12 individual's or family's premium liability, an amount equal to
6 13 the premium credit earned pursuant to subsection 2, against
6 14 the premium due in the year after the credit is earned. If
6 15 purchased through a health insurance purchasing cooperative,
6 16 the cooperative shall reduce the member assessment to the
6 17 individual or family by an equal amount.
6 18 6. The premium credit provided by this section is only
6 19 available in connection with either of the following:
6 20 a. A basic benefit plan approved by the commissioner.
6 21 b. A major medical policy approved by the commissioner
6 22 providing coverage to an eligible individual or family, either
6 23 on a group or individual basis. An individual or family may
6 24 acquire group coverage for which they are financially
6 25 responsible through an employer's participation in a health
6 26 insurance purchasing cooperative.
6 27 7. The policy shall also satisfy any conditions imposed by
6 28 rules adopted pursuant to subsection 1 which the commissioner
6 29 determines are necessary or convenient to implement and
6 30 administer the premium credit. The premium credit may be
6 31 limited to carriers or health insurance purchasing
6 32 cooperatives offering the option of a family health account as
6 33 determined by the commissioner.
6 34 8. a. A person submitting an intentionally fraudulent
6 35 premium credit application forfeits the credit and shall pay
7 1 to the division a liquidated damages penalty of one hundred
7 2 percent of the credit forfeited.
7 3 b. A person submitting a premium credit application which
7 4 that person should have known was false forfeits the credit
7 5 and shall pay to the division a liquidated damages penalty of
7 6 ten percent of the credit forfeited.
7 7 9. The insurance carrier shall receive a premium tax
7 8 credit equal to, at a minimum, the premium credit earned by
7 9 the carrier's insureds pursuant to subsection 2.
7 10 Sec. 7. HEALTH INSURANCE COST DEDUCTION &endash; CONTINGENT
7 11 EFFECT. Section 1 of this Act, which amends section 422.7 by
7 12 adding a new subsection 32, is effective upon the enactment of
7 13 a federal individual income tax provision authorizing the
7 14 deduction in computing federal adjusted gross income of one
7 15 hundred percent of the cost of the purchase of health
7 16 insurance. Section 1 of this Act applies to tax years
7 17 designated in the federal enactment of the health insurance
7 18 cost deduction.
7 19 Sec. 8. EFFECTIVE DATE. Section 2 of this Act, which
7 20 amends section 422.7 by adding new subsections 33, 34, and 35,
7 21 section 3 of this Act, which amends section 422.9, subsection
7 22 2, and section 4 of this Act, which creates new section
7 23 505.22, are effective January 1, 1996, for tax years beginning
7 24 on or after that date.
7 25 EXPLANATION
7 26 This bill enacts provisions relating to the cost of health
7 27 care and providing health care coverage to uninsured
7 28 individuals.
7 29 Section 422.7 is amended to allow for the deduction of 100
7 30 percent of health insurance costs from adjusted gross income
7 31 in computing state individual income tax and allows a
7 32 deduction for amounts of contributions to a family health
7 33 account. In addition, the bill allows a deduction from
7 34 adjusted gross income for the interest earned on a family
7 35 health account to the extent not withdrawn or not used for a
8 1 nonapproved purpose.
8 2 New section 505.22 is created which establishes family
8 3 health accounts to provide for the payment of health care
8 4 costs for certain individuals.
8 5 Section 513B.37 is amended to provide that the insurance
8 6 commissioner may determine the benefits or direct pay
8 7 requirements to be minimally included in a standard group
8 8 benefit coverage policy or subscription contract in the same
8 9 manner as currently permitted for a basic benefit coverage
8 10 policy or subscription contract.
8 11 New section 513B.44 is created and directs the insurance
8 12 division to implement and administer a premium credit to be
8 13 provided to individuals and families wishing to apply for the
8 14 premium credit.
8 15 Section 1 of the bill is effective upon the enactment of a
8 16 federal individual income tax provision authorizing a
8 17 deduction for purposes of computing federal adjusted gross
8 18 income of 100 percent of the cost of the purchase of health
8 19 insurance and is applicable to tax years designated in the
8 20 federal enactment.
8 21 Sections 2 through 4 are effective January 1, 1996, for tax
8 22 years beginning on or after that date.
8 23 LSB 1685HC 76
8 24 mj/cf/24
Text: HSB00050 Text: HSB00052 Text: HSB00000 - HSB00099 Text: HSB Index Bills and Amendments: General Index Bill History: General Index
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