2002 Legislation
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SENATE BILL NO. 1302 – Medical savngs acct, depostory/rqmt

SENATE BILL NO. 1302

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Daily Data Tracking History



S1302aa........................................................by SCHROEDER
MEDICAL SAVINGS ACCOUNTS - Amends existing law to revise reporting
requirements for medical savings accounts; and to provide application to
account holders of certain medical savings accounts.
                                                                        
01/18    Senate intro - 1st rdg - to printing
01/21    Rpt prt - to Loc Gov
01/29    Rpt out - to 14th Ord
03/01    Rpt out amen - to engros
03/04    Rpt engros - 1st rdg - to 2nd rdg as amen
03/05    2nd rdg - to 3rd rdg as amen
03/07    3rd rdg as amen - PASSED - 35-0-0
      AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
      Burtenshaw, Cameron, Darrington, Davis, Deide, Dunklin, Frasure,
      Geddes, Goedde, Hawkins, Hill, Ingram, Ipsen, Keough, King-Barrutia,
      Little, Lodge, Marley, Noh, Richardson, Risch, Sandy, Schroeder,
      Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler, Williams
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Schroeder
    Title apvd - to House
03/08    House intro - 1st rdg - to Rev/Tax
03/13    Rpt out - rec d/p - to 2nd rdg
    Rls susp - PASSED - 66-0-4
      AYES -- Aikele, Barraclough, Barrett, Bedke, Bell, Black, Block, Boe,
      Bolz, Bradford, Bruneel, Callister, Campbell, Clark, Collins, Cuddy,
      Deal, Denney, Ellis, Ellsworth, Eskridge, Field(13), Field(20),
      Gagner, Gould, Hadley, Hammond, Harwood, Henbest, Higgins, Hornbeck,
      Jaquet, Jones, Kellogg, Kendell, Kunz, Lake, Langford, Loertscher,
      Mader, Martinez, McKague, Meyer, Montgomery, Mortensen, Pearce,
      Pischner, Pomeroy, Raybould, Ridinger, Roberts, Robison, Sali,
      Schaefer, Sellman, Shepherd, Smith(33), Smylie, Stevenson, Stone,
      Tilman, Trail, Wheeler, Wood, Young, Mr. Speaker
      NAYS -- None
      Absent and excused -- Bieter, Crow, Moyle, Smith(23)
    Floor Sponsor - Trail
    Title apvd - to Senate
03/13    To enrol
03/14    Rpt enrol - Pres signed - Sp signed
03/15    To Governor
03/22    Governor signed
         Session Law Chapter 212
         Effective: 01/01/02

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1302
                                                                        
                                        BY SCHROEDER
                                                                        
  1                                        AN ACT
  2    RELATING TO MEDICAL SAVINGS ACCOUNTS; AMENDING SECTION 63-3022K,  IDAHO  CODE,
  3        TO  PROVIDE  THAT DEPOSITORIES SHALL NOT BE REQUIRED TO SPECIFICALLY IDEN-
  4        TIFY THE MEDICAL SAVINGS ACCOUNT IN ANY WAY, TO DELETE REPORTING  REQUIRE-
  5        MENTS FOR DEPOSITORIES TO THE STATE TAX COMMISSION AND TO PROVIDE APPLICA-
  6        TION  TO ACCOUNT HOLDERS OF CERTAIN MEDICAL SAVINGS ACCOUNTS; DECLARING AN
  7        EMERGENCY AND PROVIDING RETROACTIVE APPLICATION.
                                                                        
  8    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  9        SECTION 1.  That Section 63-3022K, Idaho Code, be, and the same is  hereby
 10    amended to read as follows:
                                                                        
 11        63-3022K.  MEDICAL  SAVINGS  ACCOUNT.  (1) For taxable years commencing on
 12    and after January 1, 1995, annual contributions to a medical  savings  account
 13    not  exceeding two thousand dollars ($2,000) for the account holder and inter-
 14    est earned on a medical savings account shall be deducted from taxable  income
 15    by  the  account  holder,  if  such amount has not been previously deducted or
 16    excluded in arriving at taxable income. For married  individuals  the  maximum
 17    deduction  shall  be computed separately for each individual. Contributions to
 18    the account shall not exceed the amount deductible under this section.
 19        (2)  For the purpose of this section, the following terms have the follow-
 20    ing meanings unless the context clearly denotes otherwise:
 21        (a)  "Account holder" means an individual, in the case of married individ-
 22        uals each spouse, including a self-employed person, on  whose  behalf  the
 23        medical savings account is established.
 24        (b)  "Dependent"  means  a  person for whom a deduction is permitted under
 25        section 151(b) or (c) of the Internal Revenue Code if a deduction for  the
 26        person is claimed for that person on the account holder's Idaho income tax
 27        return.
 28        (c)  "Dependent  child"  means a child or grandchild of the account holder
 29        who is not a dependent if the account holder actually  pays  the  eligible
 30        medical expenses of the child or grandchild and the child or grandchild is
 31        any of the following:
 32             (i)   Under  nineteen  (19)  years of age, or enrolled as a full-time
 33             student at an accredited college or university.
 34             (ii)  Legally entitled to the provision of proper or  necessary  sub-
 35             sistence,  education, medical care or other care necessary for his or
 36             her health, guidance or well-being  and  not  otherwise  emancipated,
 37             self-supporting,  married  or  a  member  of  the armed forces of the
 38             United States.
 39             (iii) Mentally or physically incapacitated to the extent that  he  or
 40             she is not self-sufficient.
 41        (d)  "Depository" means a state or national bank, savings and loan associ-
 42        ation,  credit  union or trust company authorized to act as a fiduciary or
 43        an insurance administrator or insurance company authorized to do  business
                                                                        
                                           2
                                                                        
  1        in  this state, a broker or investment advisor regulated by the department
  2        of finance, a broker or insurance agent regulated  by  the  department  of
  3        insurance or a health maintenance organization, fraternal benefit society,
  4        hospital  and  professional  service  corporation  as  defined  in section
  5        41-3403, Idaho Code, or nonprofit mutual insurer regulated under title 41,
  6        Idaho Code.
  7        (e)  "Eligible medical expense" means an expense paid by the taxpayer  for
  8        medical care described in section 213(d) of the Internal Revenue Code, and
  9        long-term  care  expenses of the account holder and the spouse, dependents
 10        and dependent children of the account holder.
 11        (f)  "Long-term care expenses" means expenses incurred in providing custo-
 12        dial care in a nursing facility as defined in section 39-1301, Idaho Code,
 13        and for insurance premiums relating  to  long-term  care  insurance  under
 14        chapter 46, title 41, Idaho Code.
 15        (g)  "Medical savings account" means an account established with a deposi-
 16        tory  to  pay  the eligible medical expenses of the account holder and the
 17        dependents and dependent children of the account holder.  Medical  savings
 18        accounts  shall carry the name of the account holder, a designated benefi-
 19        ciary or beneficiaries of the account holder and the depository  shall  be
 20        designated  by  the  depository  as  a  "medical  savings account." not be
 21        required to specifically identify the account in any way.
 22        (3)  Upon agreement between an employer  and  employee,  an  employer  may
 23    establish and contribute to the employee's medical savings account or contrib-
 24    ute  to  an  employee's  existing  medical savings account. The total combined
 25    annual contributions by an employer and the account holder  shall  not  exceed
 26    two  thousand  dollars ($2,000) for the account holder. Employer contributions
 27    to an employee's medical savings account shall be owned by the employee.
 28        (4)  Funds held in a medical savings  account  may  be  withdrawn  by  the
 29    account  holder  at  any  time. Withdrawals for the purpose of paying eligible
 30    medical expenses shall not be subject to the tax imposed in this chapter.  The
 31    burden  of  proving  that a withdrawal from a medical savings account was made
 32    for an eligible medical expense is upon the account holder and  not  upon  the
 33    depository  or  the employer of the account holder. Other withdrawals shall be
 34    subject to the following restrictions and penalties:
 35        (a)  There shall be a distribution penalty for withdrawal of funds by  the
 36        account  holder  for  purposes  other than the payment of eligible medical
 37        expenses. The penalty shall be ten percent (10%) of the  amount  of  with-
 38        drawal  from  the  account and, in addition, the amount withdrawn shall be
 39        subject to the tax imposed in this chapter. The direct transfer  of  funds
 40        from a medical savings account to a medical savings account at a different
 41        depository  shall not be considered a withdrawal for purposes of this sec-
 42        tion. Charges relating  to  the  administration  and  maintenance  of  the
 43        account  by  the  depository are not withdrawals for purposes of this sec-
 44        tion.
 45        (b)  After an account holder  reaches  fifty-nine  and  one-half  (59 1/2)
 46        years of age, withdrawals may be made for eligible medical expenses or for
 47        any  other  reason without penalty, but subject to the tax imposed by this
 48        section.
 49        (c)  Upon the death of an account holder, the account principal,  as  well
 50        as  any interest accumulated thereon, shall be distributed without penalty
 51        to the designated beneficiary or beneficiaries.
 52        (d)  Funds withdrawn which are later reimbursed shall  be  taxable  unless
 53        redeposited  into the account within sixty (60) days of the reimbursement.
 54        Deposits of reimbursed eligible medical expenses shall not be included  in
 55        calculating the amount deductible.
                                                                        
                                           3
                                                                        
  1        (e)  Funds  deposited  in a medical savings account which are deposited in
  2        error or unintentionally and which are withdrawn within thirty  (30)  days
  3        of  being deposited shall be treated as if the amounts had not been depos-
  4        ited in the medical savings account. Funds withdrawn from a  medical  sav-
  5        ings  account  which  are withdrawn in error or unintentionally  and which
  6        are redeposited within thirty  (30)  days  of  being  withdrawn  shall  be
  7        treated  as if the amounts had not been withdrawn from the medical savings
  8        account.
  9        (f)  Funds withdrawn which are, not later than the sixtieth day after  the
 10        day  of the withdrawal, deposited into another medical savings account for
 11        the benefit of the same account holder are not a withdrawal  for  purposes
 12        of  this  section  and  shall  not  be  included in calculating the amount
 13        deductible.
 14        (5)  Reporting. Depositories shall provide to the state tax commission the
 15    following information regarding medical savings  accounts:  the  name  of  the
 16    account holder, the address of the account holder, the taxpayer identification
 17    number of the account holder, deposits made during the tax year by the account
 18    holder,  withdrawals  made during the tax year by the account holder, interest
 19    earned on the proceeds of a  medical  savings  account  or  other  information
 20    deemed  necessary  by  the  commission.  Reports shall be filed annually on or
 21    before the last day of February following the year to which the information in
 22    the report relates.
 23        (6)  Any medical care savings account established pursuant to chapter  53,
 24    title  41, Idaho Code, as enacted by chapter 186, laws of 1994, may be contin-
 25    ued pursuant to the provisions of this section and all duties, privileges  and
 26    liabilities  imposed in this section upon account holders of medical care sav-
 27    ings accounts and the beneficiaries of those accounts shall apply  to  account
 28    holders  of  medical care savings accounts and their beneficiaries established
 29    pursuant to chapter 53, title 41, Idaho Code, as enacted by chapter 186,  laws
 30    of 1994, as if the medical care savings account were a medical savings account
 31    established pursuant to this section.
 32        (76)  (a) If  the  account  holder's surviving spouse acquires the account
 33        holder's interest in a medical savings account by reason of being the des-
 34        ignated beneficiary of such account at the death of  the  account  holder,
 35        the  medical  savings  account  shall be treated as if the spouse were the
 36        account holder.
 37        (b)  If, by reason of the death of the account holder, any person acquires
 38        the account holder's interest in a medical savings account in  a  case  to
 39        which subparagraph (76)(a) of this section does not apply:
 40             (i)   Such  account shall cease to be a medical savings account as of
 41             the date of death; and
 42             (ii)  An amount equal to the fair market value of the assets in  such
 43             account  on  such date shall be includable, if such person is not the
 44             estate of such holder, in such person's Idaho taxable income for  the
 45             taxable  year  which  includes  such  date,  or if such person is the
 46             estate of such holder, in such holder's Idaho taxable income for  the
 47             last taxable year of such holder.
 48        (c)  The  amount includable in Idaho taxable income under subparagraph (b)
 49        of this subsection (76) by any person, other than  the  estate,  shall  be
 50        reduced by the amount of qualified medical expenses which were incurred by
 51        the decedent before the date of the decedent's death and paid by such per-
 52        son within one (1) year after such date.
                                                                        
 53        SECTION  2.  An  emergency  existing  therefor,  which emergency is hereby
 54    declared to exist, this act shall be in full force and effect on and after its
                                                                        
                                           4
                                                                        
  1    passage and approval, and retroactively to January 1, 2002.

Amendment


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                                                     Moved by    Schroeder           
                                                                        
                                                     Seconded by Andreason           
                                                                        
                                                                        
                                       IN THE SENATE
                             SENATE AMENDMENT TO S.B. NO. 1302
                                                                        
                                                                        
  1                               AMENDMENTS TO SECTION 1
  2        On page 2 of the printed bill, delete lines 19  through  21,  and  insert:
  3    "ciary  or  beneficiaries of the account holder and shall be designated by the
  4    depository as a "medical savings account."".
  5        On page 3, in line 21, following "relates." insert: "Reporting.  Deposito-
  6    ries,  in the case of medical savings accounts, shall provide to the state tax
  7    commission, in the routine fashion used for all interest-bearing accounts, the
  8    same information that is provided for any interest-bearing bank account. So as
  9    to minimize the burden of reporting, the information shall be provided in  the
 10    format  in which information is provided for any interest-bearing bank account
 11    to the state tax commission. There shall be no other  reporting  requirements.
 12    Account  holders shall provide on any state income tax form in which they take
 13    a deduction for a medical savings account the account number of their  medical
 14    savings account and the depository at which the account is held."; in line 22,
 15    delete  "6"  and insert: "6"; in line 31, delete "76" and insert: "7"; in line
 16    38, delete "76" and insert: "7"; and in line 48, delete "76" and insert: "7".
                                                                        
 17                                 CORRECTION TO TITLE
 18        On page 1, delete lines 3 through 7,  and  insert:  "TO  REVISE  REPORTING
 19    REQUIREMENTS  FOR  MEDICAL  SAVINGS  ACCOUNTS  AND  TO  PROVIDE APPLICATION TO
 20    ACCOUNT HOLDERS OF CERTAIN MEDICAL SAVINGS ACCOUNTS;  DECLARING  AN  EMERGENCY
 21    AND PROVIDING RETROACTIVE APPLICATION.".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                              SENATE BILL NO. 1302, As Amended
                                                                        
                                        BY SCHROEDER
                                                                        
  1                                        AN ACT
  2    RELATING TO MEDICAL SAVINGS ACCOUNTS; AMENDING SECTION 63-3022K,  IDAHO  CODE,
  3        TO  REVISE REPORTING REQUIREMENTS FOR MEDICAL SAVINGS ACCOUNTS AND TO PRO-
  4        VIDE APPLICATION TO ACCOUNT HOLDERS OF CERTAIN MEDICAL  SAVINGS  ACCOUNTS;
  5        DECLARING AN EMERGENCY AND PROVIDING RETROACTIVE APPLICATION.
                                                                        
  6    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  7        SECTION  1.  That Section 63-3022K, Idaho Code, be, and the same is hereby
  8    amended to read as follows:
                                                                        
  9        63-3022K.  MEDICAL SAVINGS ACCOUNT. (1) For taxable  years  commencing  on
 10    and  after  January 1, 1995, annual contributions to a medical savings account
 11    not exceeding two thousand dollars ($2,000) for the account holder and  inter-
 12    est  earned on a medical savings account shall be deducted from taxable income
 13    by the account holder, if such amount has  not  been  previously  deducted  or
 14    excluded  in  arriving  at taxable income. For married individuals the maximum
 15    deduction shall be computed separately for each individual.  Contributions  to
 16    the account shall not exceed the amount deductible under this section.
 17        (2)  For the purpose of this section, the following terms have the follow-
 18    ing meanings unless the context clearly denotes otherwise:
 19        (a)  "Account holder" means an individual, in the case of married individ-
 20        uals  each  spouse,  including a self-employed person, on whose behalf the
 21        medical savings account is established.
 22        (b)  "Dependent" means a person for whom a deduction  is  permitted  under
 23        section  151(b) or (c) of the Internal Revenue Code if a deduction for the
 24        person is claimed for that person on the account holder's Idaho income tax
 25        return.
 26        (c)  "Dependent child" means a child or grandchild of the  account  holder
 27        who  is  not  a dependent if the account holder actually pays the eligible
 28        medical expenses of the child or grandchild and the child or grandchild is
 29        any of the following:
 30             (i)   Under nineteen (19) years of age, or enrolled  as  a  full-time
 31             student at an accredited college or university.
 32             (ii)  Legally  entitled  to the provision of proper or necessary sub-
 33             sistence, education, medical care or other care necessary for his  or
 34             her  health,  guidance  or  well-being and not otherwise emancipated,
 35             self-supporting, married or a member  of  the  armed  forces  of  the
 36             United States.
 37             (iii) Mentally  or  physically incapacitated to the extent that he or
 38             she is not self-sufficient.
 39        (d)  "Depository" means a state or national bank, savings and loan associ-
 40        ation, credit union or trust company authorized to act as a  fiduciary  or
 41        an  insurance administrator or insurance company authorized to do business
 42        in this state, a broker or investment advisor regulated by the  department
 43        of  finance,  a  broker  or insurance agent regulated by the department of
                                                                        
                                           2
                                                                        
  1        insurance or a health maintenance organization, fraternal benefit society,
  2        hospital and  professional  service  corporation  as  defined  in  section
  3        41-3403, Idaho Code, or nonprofit mutual insurer regulated under title 41,
  4        Idaho Code.
  5        (e)  "Eligible  medical expense" means an expense paid by the taxpayer for
  6        medical care described in section 213(d) of the Internal Revenue Code, and
  7        long-term care expenses of the account holder and the  spouse,  dependents
  8        and dependent children of the account holder.
  9        (f)  "Long-term care expenses" means expenses incurred in providing custo-
 10        dial care in a nursing facility as defined in section 39-1301, Idaho Code,
 11        and  for  insurance  premiums  relating  to long-term care insurance under
 12        chapter 46, title 41, Idaho Code.
 13        (g)  "Medical savings account" means an account established with a deposi-
 14        tory to pay the eligible medical expenses of the account  holder  and  the
 15        dependents  and  dependent children of the account holder. Medical savings
 16        accounts shall carry the name of the account holder, a designated  benefi-
 17        ciary  or  beneficiaries  of the account holder and shall be designated by
 18        the depository as a "medical savings account."
 19        (3)  Upon agreement between an employer  and  employee,  an  employer  may
 20    establish and contribute to the employee's medical savings account or contrib-
 21    ute  to  an  employee's  existing  medical savings account. The total combined
 22    annual contributions by an employer and the account holder  shall  not  exceed
 23    two  thousand  dollars ($2,000) for the account holder. Employer contributions
 24    to an employee's medical savings account shall be owned by the employee.
 25        (4)  Funds held in a medical savings  account  may  be  withdrawn  by  the
 26    account  holder  at  any  time. Withdrawals for the purpose of paying eligible
 27    medical expenses shall not be subject to the tax imposed in this chapter.  The
 28    burden  of  proving  that a withdrawal from a medical savings account was made
 29    for an eligible medical expense is upon the account holder and  not  upon  the
 30    depository  or  the employer of the account holder. Other withdrawals shall be
 31    subject to the following restrictions and penalties:
 32        (a)  There shall be a distribution penalty for withdrawal of funds by  the
 33        account  holder  for  purposes  other than the payment of eligible medical
 34        expenses. The penalty shall be ten percent (10%) of the  amount  of  with-
 35        drawal  from  the  account and, in addition, the amount withdrawn shall be
 36        subject to the tax imposed in this chapter. The direct transfer  of  funds
 37        from a medical savings account to a medical savings account at a different
 38        depository  shall not be considered a withdrawal for purposes of this sec-
 39        tion. Charges relating  to  the  administration  and  maintenance  of  the
 40        account  by  the  depository are not withdrawals for purposes of this sec-
 41        tion.
 42        (b)  After an account holder  reaches  fifty-nine  and  one-half  (59 1/2)
 43        years of age, withdrawals may be made for eligible medical expenses or for
 44        any  other  reason without penalty, but subject to the tax imposed by this
 45        section.
 46        (c)  Upon the death of an account holder, the account principal,  as  well
 47        as  any interest accumulated thereon, shall be distributed without penalty
 48        to the designated beneficiary or beneficiaries.
 49        (d)  Funds withdrawn which are later reimbursed shall  be  taxable  unless
 50        redeposited  into the account within sixty (60) days of the reimbursement.
 51        Deposits of reimbursed eligible medical expenses shall not be included  in
 52        calculating the amount deductible.
 53        (e)  Funds  deposited  in a medical savings account which are deposited in
 54        error or unintentionally and which are withdrawn within thirty  (30)  days
 55        of  being deposited shall be treated as if the amounts had not been depos-
                                                                        
                                           3
                                                                        
  1        ited in the medical savings account. Funds withdrawn from a  medical  sav-
  2        ings  account  which  are withdrawn in error or unintentionally  and which
  3        are redeposited within thirty  (30)  days  of  being  withdrawn  shall  be
  4        treated  as if the amounts had not been withdrawn from the medical savings
  5        account.
  6        (f)  Funds withdrawn which are, not later than the sixtieth day after  the
  7        day  of the withdrawal, deposited into another medical savings account for
  8        the benefit of the same account holder are not a withdrawal  for  purposes
  9        of  this  section  and  shall  not  be  included in calculating the amount
 10        deductible.
 11        (5)  Reporting. Depositories shall provide to the state tax commission the
 12    following information regarding medical savings  accounts:  the  name  of  the
 13    account holder, the address of the account holder, the taxpayer identification
 14    number of the account holder, deposits made during the tax year by the account
 15    holder,  withdrawals  made during the tax year by the account holder, interest
 16    earned on the proceeds of a  medical  savings  account  or  other  information
 17    deemed  necessary  by  the  commission.  Reports shall be filed annually on or
 18    before the last day of February following the year to which the information in
 19    the report relates. Reporting. Depositories, in the case  of  medical  savings
 20    accounts,  shall  provide  to the state tax commission, in the routine fashion
 21    used for all interest-bearing accounts, the same information that is  provided
 22    for any interest-bearing bank account. So as to minimize the burden of report-
 23    ing,  the  information shall be provided in the format in which information is
 24    provided for any interest-bearing bank account to the  state  tax  commission.
 25    There  shall be no other reporting requirements. Account holders shall provide
 26    on any state income tax form in which they take a deduction for a medical sav-
 27    ings account the account number of  their  medical  savings  account  and  the
 28    depository at which the account is held.
 29        (6)  Any  medical care savings account established pursuant to chapter 53,
 30    title 41, Idaho Code, as enacted by chapter 186, laws of 1994, may be  contin-
 31    ued  pursuant to the provisions of this section and all duties, privileges and
 32    liabilities imposed in this section upon account holders of medical care  sav-
 33    ings  accounts  and the beneficiaries of those accounts shall apply to account
 34    holders of medical care savings accounts and their  beneficiaries  established
 35    pursuant  to chapter 53, title 41, Idaho Code, as enacted by chapter 186, laws
 36    of 1994, as if the medical care savings account were a medical savings account
 37    established pursuant to this section.
 38        (7)  (a) If the account holder's surviving  spouse  acquires  the  account
 39        holder's interest in a medical savings account by reason of being the des-
 40        ignated  beneficiary  of  such account at the death of the account holder,
 41        the medical savings account shall be treated as if  the  spouse  were  the
 42        account holder.
 43        (b)  If, by reason of the death of the account holder, any person acquires
 44        the  account  holder's  interest in a medical savings account in a case to
 45        which subparagraph (7)(a) of this section does not apply:
 46             (i)   Such account shall cease to be a medical savings account as  of
 47             the date of death; and
 48             (ii)  An  amount equal to the fair market value of the assets in such
 49             account on such date shall be includable, if such person is  not  the
 50             estate  of such holder, in such person's Idaho taxable income for the
 51             taxable year which includes such date,  or  if  such  person  is  the
 52             estate  of such holder, in such holder's Idaho taxable income for the
 53             last taxable year of such holder.
 54        (c)  The amount includable in Idaho taxable income under subparagraph  (b)
 55        of  this  subsection  (7)  by  any person, other than the estate, shall be
                                                                        
                                           4
                                                                        
  1        reduced by the amount of qualified medical expenses which were incurred by
  2        the decedent before the date of the decedent's death and paid by such per-
  3        son within one (1) year after such date.
                                                                        
  4        SECTION 2.  An emergency existing  therefor,  which  emergency  is  hereby
  5    declared to exist, this act shall be in full force and effect on and after its
  6    passage and approval, and retroactively to January 1, 2002.

Statement of Purpose / Fiscal Impact


	                    STATEMENT OF PURPOSE		


The purpose of this legislation is to provide that with respect to Medical 
Savings Accounts, depositories shall not be required to specifically identify 
the medical savings account in any way, to delete reporting requirements for 
depositories to the State Tax Commission, and to provide application to account 
holders of certain medical savings accounts.


                                   FISCAL NOTE

There is no fiscal impact to the General Fund or any level of local government.



Contact:

Marilyn Schwam
514 South Polk
Moscow, Idaho 83843
208-882-4190

Senator Gary J. Schroeder
332-1321



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