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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
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-sixth Legislature Second Regular Session - 2002IN 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 shallbe20designated 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 the15following information regarding medical savings accounts: the name of the16account holder, the address of the account holder, the taxpayer identification17number of the account holder, deposits made during the tax year by the account18holder, withdrawals made during the tax year by the account holder, interest19earned on the proceeds of a medical savings account or other information20deemed necessary by the commission. Reports shall be filed annually on or21before the last day of February following the year to which the information in22the 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.
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-sixth Legislature Second Regular Session - 2002Moved 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.".
|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-sixth Legislature Second Regular Session - 2002IN 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 the12following information regarding medical savings accounts: the name of the13account holder, the address of the account holder, the taxpayer identification14number of the account holder, deposits made during the tax year by the account15holder, withdrawals made during the tax year by the account holder, interest16earned on the proceeds of a medical savings account or other information17deemed necessary by the commission. Reports shall be filed annually on or18before the last day of February following the year to which the information in19the 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 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 S 1302