Senate File 314 - Introduced
SENATE FILE
BY BRUNKHORST, SEYMOUR, SHULL,
WARD, ZIEMAN, MULDER, MILLER,
TINSMAN, BEHN, PUTNEY, GASKILL,
HAHN, and HOUSER
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to contributions made to medical savings accounts
2 for state income tax purposes and including effective and
3 retroactive applicability date provisions.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 1368SS 81
6 mg/pj/5
PAG LIN
1 1 Section 1. Section 422.7, Code 2005, is amended by adding
1 2 the following new subsections:
1 3 NEW SUBSECTION. 44. If the individual was an account
1 4 holder of an Archer medical savings account established
1 5 pursuant to section 220 of the Internal Revenue Code or an
1 6 account beneficiary of a health savings account established
1 7 pursuant to section 223 of the Internal Revenue Code, the
1 8 following adjustments shall be made:
1 9 a. Add, to the extent excluded, contributions to the
1 10 account.
1 11 b. Subtract, to the extent included, distributions from
1 12 the account not used for qualified medical expenses, as
1 13 defined in section 220 or 223 of the Internal Revenue Code, as
1 14 appropriate.
1 15 NEW SUBSECTION. 45. If the taxpayer is an account holder
1 16 of a medical savings account pursuant to chapter 509C at any
1 17 time during the tax year, the following adjustments shall be
1 18 made:
1 19 a. Subtract, to the extent included, the following:
1 20 (1) Contributions made in cash equal to the aggregate
1 21 amount of the eligible monthly contribution amounts as
1 22 computed pursuant to section 509C.2, subsection 2.
1 23 (2) Interest and earnings on moneys in the medical savings
1 24 account.
1 25 b. Add, to the extent not included, the amount of
1 26 distributions which are not used to pay qualified medical
1 27 expenses, as defined in section 509C.1, but only if the amount
1 28 was previously excluded in determining net income under rules
1 29 adopted by the department.
1 30 Sec. 2. NEW SECTION. 509C.1 DEFINITIONS.
1 31 For purposes of this chapter, unless the context otherwise
1 32 requires:
1 33 1. "Account holder" means the individual on whose behalf a
1 34 medical savings account is established.
1 35 2. "Cut=off year" means the later of the calendar year
2 1 during which at least ten percent of state employees have
2 2 agreed with the department of administrative services to have
2 3 self=only or family coverage under a high deductible health
2 4 plan for the 2010 calendar year.
2 5 3. "High deductible health plan" means a high deductible
2 6 health plan as defined in section 220 or 223 of the Internal
2 7 Revenue Code.
2 8 4. "Medical savings account" means an Archer medical
2 9 savings account as defined in section 220 of the Internal
2 10 Revenue Code or a health savings account as defined in section
2 11 223 of the Internal Revenue Code.
2 12 5. "Permitted insurance" means the same as defined in
2 13 section 220 or 223 of the Internal Revenue Code.
2 14 6. "Qualified medical expenses" means qualified medical
2 15 expenses as defined in section 220 or 223 of the Internal
2 16 Revenue Code, as appropriate.
2 17 Sec. 3. NEW SECTION. 509C.2 ELIGIBILITY == TAX
2 18 DEDUCTION.
2 19 1. An individual is eligible to be an account holder of a
2 20 medical savings account into which contributions are
2 21 deductible for state individual income tax under chapter 422,
2 22 division II, if all of the following apply:
2 23 a. The individual was a state employee during the time
2 24 contributions are made to the account.
2 25 b. The individual entered into an agreement with the
2 26 department of administrative services prior to the cut=off
2 27 period not to be covered by any state health plan or health
2 28 plan of the individual's spouse, except for permitted
2 29 insurance.
2 30 c. The individual established a medical savings account.
2 31 2. The amount deductible by a taxpayer who is an account
2 32 holder under subsection 1 is the amount deducted pursuant to
2 33 section 220 or 223 of the Internal Revenue Code for federal
2 34 income tax purposes.
2 35 Sec. 4. NEW SECTION. 509C.3 PILOT PROGRAM.
3 1 1. The department of administrative services shall
3 2 establish a pilot program to allow state employees to
3 3 establish an Archer medical savings account under section 220
3 4 of the Internal Revenue Code or a health savings account under
3 5 section 223 of the Internal Revenue Code. The goal of the
3 6 pilot program is to enroll ten percent of the state employees.
3 7 2. To establish and as part of the pilot program, the
3 8 department shall do all of the following:
3 9 a. Provide notice to each full=time state employee of the
3 10 availability and advantages of the program.
3 11 b. Enter into agreements to enroll state employees in the
3 12 program.
3 13 c. Offer assistance to enrolled employees in establishing
3 14 medical savings accounts.
3 15 d. At least annually, conduct a random survey of state
3 16 employees concerning medical savings accounts.
3 17 e. Report annually to the general assembly and the
3 18 legislative services agency on the monetary effects of the
3 19 program.
3 20 Sec. 5. EFFECTIVE AND APPLICABILITY DATE. This Act, being
3 21 deemed of immediate importance, takes effect upon enactment
3 22 and applies retroactively to January 1, 2005, for tax years
3 23 beginning on or after that date.
3 24 EXPLANATION
3 25 This bill does not allow contributions to Archer medical
3 26 savings accounts or health savings accounts to be deducted for
3 27 state income tax purposes as the contributions are for federal
3 28 income tax purposes. However, a pilot program is established
3 29 for state employees to authorize them to set up these health
3 30 savings accounts in lieu of being covered by state health
3 31 plans. These state employees are allowed a deduction for
3 32 contributions made to the health savings account for state
3 33 income tax purposes just like the deduction for these
3 34 contributions under the federal income tax.
3 35 The bill takes effect upon enactment and applies
4 1 retroactively to January 1, 2005, for tax years beginning on
4 2 or after that date.
4 3 LSB 1368SS 81
4 4 mg:rj/pj/5.1