SENATE BILL NO. 854
January 28, 1998, Introduced by Senator SHUGARS and referred
to the Committee on Health Policy and Senior Citizens.
A bill to permit the establishment and maintenance of health
benefit accounts; to provide penalties and remedies; to provide
for certain tax deductions; to prescribe the requirements of and
restrictions on health benefit accounts; and to repeal acts and
parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 1. This act shall be known and may be cited as the
2 "health benefit account act".
3 Sec. 2. As used in this act:
4 (a) "Account administrator" means any of the following:
5 (i) A state chartered bank, savings and loan
association,
6 credit union, or trust company authorized to act as fiduciary in
7 this state or a national banking association or federal savings
8 and loan association or credit union authorized to act as
9 fiduciary in this state.
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1 (ii) An insurance company authorized to do business in
this
2 state under the insurance code of 1956, 1956 PA 218, MCL 500.100
3 to 500.8302, or a health care corporation operating under the
4 nonprofit health care corporation reform act, 1980 PA 350, MCL
5 550.1101 to 550.1704.
6 (iii) A broker-dealer, commodity issuer, or investment
advi-
7 sor registered pursuant to the uniform securities act, 1964 PA
8 265, MCL 451.501 to 451.818, or a federal investment company reg-
9 istered under the investment company act of 1940, title I of
10 chapter 686, 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-3 and 80a-4 to
11 80a-64.
12 (iv) A third party administrator with a current
certificate
13 of authority issued pursuant to the third party administrator
14 act, 1984 PA 218, MCL 550.901 to 550.962.
15 (v) A certified public accountant licensed to practice
in
16 this state pursuant to article 7 of the occupational code, 1980
17 PA 299, MCL 339.701 to 339.716.
18 (b) "Account holder" means the resident individual who
19 establishes a health benefits account.
20 (c) "Deductible" means the total deductible for an account
21 holder, the family of the account holder, and all of the depen-
22 dents of that account holder for a calendar year.
23 (d) "Dependent" means the spouse of an account holder or a
24 child of an account holder if the child is any of the following:
25 (i) Under 23 years of age and enrolled as a full-time
stu-
26 dent at an accredited college or university or under 19 years of
27 age.
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1 (ii) Legally entitled to the provision of proper or
2 necessary subsistence, education, medical care, or other care
3 necessary for his or her health, guidance, or well-being and not
4 otherwise emancipated, self-supporting, married, or a member of
5 the armed forces of the United States.
6 (iii) Mentally or physically incapacitated to the
extent
7 that he or she is not self-sufficient.
8 (e) "Domicile" means a place where a person has his or her
9 true, fixed, and permanent home and principal establishment to
10 which, whenever absent therefrom, he or she intends to return.
11 Domicile continues until another permanent establishment is
12 established. An individual who lives in this state at least 183
13 days during the tax year or more than 1/2 the days during a tax
14 year of less than 12 months is considered domiciled in this state
15 for the tax year.
16 (f) "Eligible medical expense" means an expense paid by the
17 taxpayer for medical care described in section 213(d) of the
18 internal revenue code of 1986.
19 (g) "ERISA" means the employer retirement income security
20 act of 1974, Public Law 93-406, 88 Stat. 829.
21 (h) "Health benefit account" or "account" means an account
22 established in this state to pay the eligible medical expenses of
23 an account holder, the family of an account holder, or the depen-
24 dents of an account holder.
25 (i) "High deductible health plan" means a health coverage
26 policy, certificate, or contract or health plan that provides for
27 payments for covered benefits that exceed the deductible and that
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1 is purchased by an account holder. The deductible for a high
2 deductible health plan shall be not less than $1,000.00 and not
3 more than $3,000.00.
4 (j) "Resident" means an individual domiciled in the state.
5 Sec. 3. (1) For the 1998 tax year, and each tax year after
6 the 1998 tax year, a resident individual may establish a health
7 benefit account for himself or herself, for his or her depen-
8 dents, or for his or her family with an account administrator.
9 (2) To qualify to establish a health benefit account, an
10 individual shall meet all of the following criteria:
11 (a) Make contributions to a health benefit account for the
12 tax year in which the account is established not to exceed
13 $3,000.00.
14 (b) Purchase or assure the purchase of a high deductible
15 health plan for the benefit of the account holder, for his or her
16 family, or for his or her dependents for each tax year in which
17 the account is open.
18 (c) Have no coverage under any health coverage policy, cer-
19 tificate, or contract or self-funded plan other than a high
20 deductible health plan or other plan purchased with money from an
21 account.
22 Sec. 4. (1) An account administrator shall administer the
23 health benefit account from which the payment of eligible medical
24 expenses are made and has a fiduciary duty to the person or per-
25 sons for whose benefit the account administrator administers an
26 account.
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1 (2) The account administrator shall utilize the funds held
2 in a health benefit account solely for the purpose of paying the
3 eligible medical expenses of the account holder, his or her
4 family, or his or her dependents or to purchase a high deductible
5 health plan or other health coverage policy, certificate, con-
6 tract, or plan.
7 (3) Funds held in an account shall not be used to pay medi-
8 cal expenses of the account holder, his or her family, or his or
9 her dependents that are otherwise reimbursable including but not
10 limited to medical expenses payable under an automobile insurance
11 policy, worker's compensation insurance policy or self-insured
12 plan, or another health coverage policy, certificate, or
13 contract.
14 (4) To utilize the money in a health benefit account to pay
15 medical expenses, an account holder shall submit documentation of
16 medical expenses or high deductible health plan premiums paid by
17 the account holder in the tax year to the account administrator,
18 and the account administrator shall reimburse the account holder
19 from the account holder's account for eligible medical expenses.
20 Sec. 5. (1) To qualify for the tax deduction allowed under
21 section 30(1)(v) of the income tax act of 1967, 1967 PA 281, MCL
22 206.30, an account holder shall withdraw money from his or her
23 health benefit account only for a purpose described in
24 section 4(2) and subject to the limitations in section 4(3).
25 (2) Subject to subsection (3), if an account holder with-
26 draws money for any purpose other than a purpose described in
27 section 4(2), the account administrator shall withhold from the
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1 amount of the withdrawal and on behalf of the account holder
2 shall pay a penalty to the department of treasury equal to 10% of
3 the amount of the withdrawal and the account holder shall include
4 the amount of the withdrawal as income for the tax year in which
5 the withdrawal was made as provided in section 30(1)(v) of the
6 income tax act of 1967, 1967 PA 281, MCL 206.30.
7 (3) The amount of a disbursement of any assets of a health
8 benefit account pursuant to a filing for protection under title
9 11 of the United States code, 11 U.S.C. 101 to 1330, by an
10 account holder or person for whose benefit an account was estab-
11 lished is not considered a withdrawal for purposes of this
12 section.
13 (4) Upon the death of an account holder, the account admin-
14 istrator shall distribute the principal and accumulated interest
15 of the health benefit account to the estate of the account
16 holder.
17 Enacting section 1. This act does not take effect unless
18 all of the following bills of the 89th Legislature are enacted
19 into law:
20 (a) Senate Bill No. 157.
21 (b) Senate Bill No. 332.
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