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Wisconsin
Health Savings Account Legislation
By
Fred
Adams
Vice President- HSA for
America
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Legislation
to be Introduced in Wisconsin to Give State Deductibility
for Health Savings Account Contributions
The Wisconsin
House has decided not to add new language to the debt refinancing
bill that would have allowed citizens of Wisconsin to deduct
their HSA contributions from their state taxes, as federal
law already allows.
Assembly
Speaker John Gard, R-Peshtigo, had originally planned to attach
a proposal to debt refinancing legislation that would make
money that people deposit into their health savings accounts
deductible for Wisconsin state taxes. Health savings
accounts are already deductible from federal taxes, but currently
Wisconsin is the only state in the country that does not allow
tax deductions for HSA contributions.
Without
the support of his Senate Republican colleagues, Gard said
"it became clear that (they) were not going to be able
to match our ability to move this bill forward on the schedule
we had hoped."
Health
Savings Accounts are tax-deductible savings accounts which,
when paired with a qualifying High-Deductible Health Plan
(HDHP), allow individuals to deposit tax-deductible funds
into an account that they can use to cover medical costs.
Proponents point out that HSAs enable people to take control
of their own health care decisions, and put market pressures
back into medical pricing.
To open
a Health Savings Account you must first have a high-deductible
health insurance policy that qualifies to be partnered
with an HSA. These plans are available through various
insurance companies, depending in what part of the country
you live. The plans are all similar in the fact that
they have deductibles between $1000 and $5100 for singles,
and between $2000 and $10200 for families.
Once your
insurance policy has become effective, you may fund your HSA
account. HSAs allow you to legally avoid federal income tax
by depositing 100% of the health plan's deductible, up to
$2650 for singles or $5250 for families, into your HSA account.
Even though
you have received a tax-deduction by putting your money into
this account, the money is still yours to spend tax-free,
as long as you spend it on qualified medical expenses.
Since you have a high-deductible plan, this would of course
include any expenses you incur from going to the doctor, purchasing
prescription drugs, or paying other expenses toward your deductible.
Once your deductible is met, the health insurance covers your
medical expenses as defined in the policy.
In addition
to being able to withdraw your money tax-free to cover these
types of expenses (which might otherwise be covered by a traditional
low-deductible high-premium policy), you can use your HSA
account to cover other costs that would not normally be covered
by a health insurance policy.
"There
is an opportunity for everybody to win, to pass a part of
the savings on to a taxpayer to refinance the state debt,"
Gard said. "Giving him what he asks for, in return for
something we think is valuable for the people of Wisconsin."
Though
Governor Jim Doyle previously vetoed legislation that would
have made the accounts deductible, claiming this deduction
would only benefit the rich, Gard contends that "regular
people in the middle class would primarily benefit".
Growth in Health Savings Accounts has been rapid among self-employed
individuals, and many employers are expected to make the plans
available to their employees in 2006.
Gard says
it is still his intention to move the HSA tax exemption forward
quickly, and adds he expects this important piece of health
care reform to pass within the next month. To that end
he is urging follow members of the House in Wisconsin "to
return a portion of that money to the taxpayers who earned
it in the first place by making Health Savings Accounts (HSA)
exempt from Wisconsin taxes."
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