« An Overview of the Aetna Health Savings Account Plan | Main | Health Savings Accounts Offer an Effective Solution for Lowering Health Insurance Premiums »
February 07, 2010
Alabama Legislator Hopes to Offer Pre-tax Health Savings Accounts
An Alabama legislature hopes to create tax-free Health Savings Account options for Alabama residents. According to Federal laws, families and individuals can have Health Savings Accounts that help them reduce their annual health care costs and tax burdens. However, the state of Alabama does not offer its residents tax-free Health Savings Accounts.
Rep. Greg Canfield (R-Vestavia Hills) introduced a new bill to the Alabama House of Representatives on January 12 that would allow individuals and families in Alabama to deposit their pre-tax earnings into a Health Savings Accounts to help cover qualifying medical expenses.
The bill, House Bill 101, would also ensure that the principal and interest earned on those Health Savings Accounts would be tax-free.
“Specifically, it would establish that individuals or businesses would be able to put money in an account and have the principal and interest shielded from state income tax,” said Canfield. “It gives the ability for small and medium businesses to reduce costs for medical benefits and those (companies) not providing it a chance to do so. It would also expand medical insurance in Alabama for individuals who are not able to afford it by setting aside money on a tax-shielded basis.”
If the bill is passed, individual account-holders in Alabama could contribute a tax-free$1,500-$2,250 to their Health Savings Accounts per year. Families can contribute $3,000-$4,500 tax-free. These funds would be earmarked to pay for qualifying medical expenses, but can be withdrawn to pay for any expenses. Along with the Health Savings Accounts, participants will need to enroll in high-deductible health insurance plans in order to qualify. Canfield noted that the savings for a family of four that participates in a HSA plan could be between $125 and $275 per year, but varies based on the amount of the annual contribution.
Posted by Wiley Long at February 7, 2010 05:06 PM