Allows insurers to offer high-deductible health insurance policies in conjunction with medical savings accounts.

A BILL FOR AN ACT

SECTION 1. The legislature finds that, in 1996, Congress passed the Health Insurance Portability and Accountability Act, which created the first federal tax-free medical savings accounts. Medical savings accounts, which are tax-deferred accounts designated for health care, operate in conjunction with a high-deductible health insurance policy. Funds in medical savings accounts may be used to pay for health-related costs not covered under an insurance policy.

The legislature notes that deposits made to a medical savings account, up to an established maximum, and the interest earned, are not taxed if used for qualified medical expenses. Furthermore, money remaining in the account at the end of the year may accumulate to cover future medical bills. The legislature notes that, for many individuals, medical savings accounts may create new avenues in which to pay for health-related expenses.

The State tax code already recognizes medical savings accounts in section 235-2.4(i), Hawaii Revised Statutes, but there is no further mention of medical savings accounts in the Hawaii Revised Statutes. Furthermore, the legislature finds that there may be some confusion as to whether insurers are allowed to offer high-deductible health insurance policies in conjunction with medical savings accounts in this State. This Act resolves this issue, and allows private health insurers, mutual benefit societies, and health maintenance organizations to offer high-deductible health insurance policies in conjunction with medical savings accounts in this State.

SECTION 2. Chapter 431:10A, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§431:10A- High-deductible contracts for medical savings accounts. An insurer may offer a high-deductible health insurance contract to employers or self-employed individuals that establish medical savings accounts, as defined in section 220 of the Internal Revenue Code."

SECTION 3. Chapter 432, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§432- High-deductible contracts for medical savings accounts. A mutual benefit society may offer a high-deductible health insurance contract to employers or self-employed individuals that establish medical savings accounts, as defined in section 220 of the Internal Revenue Code."

SECTION 4. Chapter 432D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§432D- High-deductible contracts for medical savings accounts. A health maintenance organization may offer a high-deductible health insurance contract to employers or self-employed individuals that establish medical savings accounts, as defined in section 220 of the Internal Revenue Code."

SECTION 5. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.