HF 328

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act
  1.2             relating to taxation; providing for tax deductions for 
  1.3             individual medical savings accounts for persons not 
  1.4             enrolled in an employer-sponsored medical savings 
  1.5             account; permitting health maintenance organizations 
  1.6             to provide coverage supplemental to medical savings 
  1.7             accounts on the same basis as other insurers; amending 
  1.8             Minnesota Statutes 1996, sections 62D.02, subdivision 
  1.9             8; and 290.01, subdivisions 19a and 19b; proposing 
  1.10            coding for new law in Minnesota Statutes, chapter 62Q. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1996, section 62D.02, 
  1.13  subdivision 8, is amended to read: 
  1.14     Subd. 8.  "Health maintenance contract" means any contract 
  1.15  whereby a health maintenance organization agrees to provide 
  1.16  comprehensive health maintenance services to enrollees, provided 
  1.17  that the contract may contain reasonable enrollee copayment 
  1.18  provisions.  An individual or group health maintenance contract 
  1.19  may contain the copayment and deductible provisions specified in 
  1.20  this subdivision.  Copayment and deductible provisions in group 
  1.21  contracts shall not discriminate on the basis of age, sex, race, 
  1.22  length of enrollment in the plan, or economic status; and during 
  1.23  every open enrollment period in which all offered health benefit 
  1.24  plans, including those subject to the jurisdiction of the 
  1.25  commissioners of commerce or health, fully participate without 
  1.26  any underwriting restrictions, copayment and deductible 
  1.27  provisions shall not discriminate on the basis of preexisting 
  1.28  health status.  In no event shall the sum of the annual 
  2.1   copayments and deductible exceed the maximum out-of-pocket 
  2.2   expenses allowable for a number three qualified plan under 
  2.3   section 62E.06, nor shall that sum exceed $5,000 per family.  
  2.4   The annual deductible must not exceed $1,000 per person.  The 
  2.5   annual deductible must not apply to preventive health services 
  2.6   as described in Minnesota Rules, part 4685.0801, subpart 8.  
  2.7   Where sections 62D.01 to 62D.30 permit a health maintenance 
  2.8   organization to contain reasonable copayment provisions for 
  2.9   preexisting health status, these provisions may vary with 
  2.10  respect to length of enrollment in the plan.  Notwithstanding 
  2.11  any provisions of this subdivision, a health maintenance 
  2.12  organization may offer, for use in connection with a medical 
  2.13  savings account qualified under federal law or under section 
  2.14  62Q.60, a high deductible health plan as defined in section 301 
  2.15  of the federal Health Insurance Portability and Accountability 
  2.16  Act of 1996.  Any contract may provide for health care services 
  2.17  in addition to those set forth in subdivision 7. 
  2.18     Sec. 2.  [62Q.60] [INDIVIDUAL MEDICAL SAVINGS ACCOUNTS.] 
  2.19     Subdivision 1.  [TAX TREATMENT.] A medical savings account 
  2.20  that meets the requirements of this section is eligible for the 
  2.21  tax treatment provided in section 290.01, subdivisions 19a and 
  2.22  19b, where those subdivisions reference this section. 
  2.23     Subd. 2.  [REQUIREMENTS.] A medical savings account meets 
  2.24  the requirements of this section if it: 
  2.25     (1) is either: 
  2.26     (i) established and maintained by an individual who is not 
  2.27  enrolled in employer-sponsored health coverage, including a 
  2.28  medical savings account under section 301 of the federal Health 
  2.29  Insurance Portability and Accountability Act of 1996 (to be 
  2.30  codified as Internal Revenue Code, section 220); or 
  2.31     (ii) is maintained, without new contributions, by an 
  2.32  individual who no longer qualifies under item (i), but who did 
  2.33  qualify under item (i) at the time of all contributions; and 
  2.34     (2) otherwise meets all requirements of a medical savings 
  2.35  account provided under the federal law referenced in clause (1), 
  2.36  item (i), except that the account administrator may be: 
  3.1      (i) an account administrator permitted under the federal 
  3.2   law; 
  3.3      (ii) a health plan company as defined in section 62Q.01; 
  3.4      (iii) a third-party administrator licensed under section 
  3.5   60A.23, subdivision 8; or 
  3.6      (iv) a certified public accountant licensed to practice in 
  3.7   this state under section 326.19. 
  3.8      Sec. 3.  Minnesota Statutes 1996, section 290.01, 
  3.9   subdivision 19a, is amended to read: 
  3.10     Subd. 19a.  [ADDITIONS TO FEDERAL TAXABLE INCOME.] For 
  3.11  individuals, estates, and trusts, there shall be added to 
  3.12  federal taxable income: 
  3.13     (1)(i) interest income on obligations of any state other 
  3.14  than Minnesota or a political or governmental subdivision, 
  3.15  municipality, or governmental agency or instrumentality of any 
  3.16  state other than Minnesota exempt from federal income taxes 
  3.17  under the Internal Revenue Code or any other federal statute, 
  3.18  and 
  3.19     (ii) exempt-interest dividends as defined in section 
  3.20  852(b)(5) of the Internal Revenue Code, except the portion of 
  3.21  the exempt-interest dividends derived from interest income on 
  3.22  obligations of the state of Minnesota or its political or 
  3.23  governmental subdivisions, municipalities, governmental agencies 
  3.24  or instrumentalities, but only if the portion of the 
  3.25  exempt-interest dividends from such Minnesota sources paid to 
  3.26  all shareholders represents 95 percent or more of the 
  3.27  exempt-interest dividends that are paid by the regulated 
  3.28  investment company as defined in section 851(a) of the Internal 
  3.29  Revenue Code, or the fund of the regulated investment company as 
  3.30  defined in section 851(h) of the Internal Revenue Code, making 
  3.31  the payment; and 
  3.32     (iii) for the purposes of items (i) and (ii), interest on 
  3.33  obligations of an Indian tribal government described in section 
  3.34  7871(c) of the Internal Revenue Code shall be treated as 
  3.35  interest income on obligations of the state in which the tribe 
  3.36  is located; 
  4.1      (2) the amount of income taxes paid or accrued within the 
  4.2   taxable year under this chapter and income taxes paid to any 
  4.3   other state or to any province or territory of Canada, to the 
  4.4   extent allowed as a deduction under section 63(d) of the 
  4.5   Internal Revenue Code, but the addition may not be more than the 
  4.6   amount by which the itemized deductions as allowed under section 
  4.7   63(d) of the Internal Revenue Code exceeds the amount of the 
  4.8   standard deduction as defined in section 63(c) of the Internal 
  4.9   Revenue Code.  For the purpose of this paragraph, the 
  4.10  disallowance of itemized deductions under section 68 of the 
  4.11  Internal Revenue Code of 1986, income tax is the last itemized 
  4.12  deduction disallowed; 
  4.13     (3) the capital gain amount of a lump sum distribution to 
  4.14  which the special tax under section 1122(h)(3)(B)(ii) of the Tax 
  4.15  Reform Act of 1986, Public Law Number 99-514, applies; and 
  4.16     (4) the amount of income taxes paid or accrued within the 
  4.17  taxable year under this chapter and income taxes paid to any 
  4.18  other state or any province or territory of Canada, to the 
  4.19  extent allowed as a deduction in determining federal adjusted 
  4.20  gross income.  For the purpose of this paragraph, income taxes 
  4.21  do not include the taxes imposed by sections 290.0922, 
  4.22  subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729; 
  4.23  and 
  4.24     (5) a withdrawal from an individual medical savings account 
  4.25  that meets the requirements of section 62Q.60, for purposes 
  4.26  other than payment of or reimbursement for qualified medical 
  4.27  expenses as defined in section 301 of the federal Health 
  4.28  Insurance Portability and Accountability Act of 1996. 
  4.29     Sec. 4.  Minnesota Statutes 1996, section 290.01, 
  4.30  subdivision 19b, is amended to read: 
  4.31     Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
  4.32  individuals, estates, and trusts, there shall be subtracted from 
  4.33  federal taxable income: 
  4.34     (1) interest income on obligations of any authority, 
  4.35  commission, or instrumentality of the United States to the 
  4.36  extent includable in taxable income for federal income tax 
  5.1   purposes but exempt from state income tax under the laws of the 
  5.2   United States; 
  5.3      (2) if included in federal taxable income, the amount of 
  5.4   any overpayment of income tax to Minnesota or to any other 
  5.5   state, for any previous taxable year, whether the amount is 
  5.6   received as a refund or as a credit to another taxable year's 
  5.7   income tax liability; 
  5.8      (3) the amount paid to others not to exceed $650 for each 
  5.9   dependent in grades kindergarten to 6 and $1,000 for each 
  5.10  dependent in grades 7 to 12, for tuition, textbooks, and 
  5.11  transportation of each dependent in attending an elementary or 
  5.12  secondary school situated in Minnesota, North Dakota, South 
  5.13  Dakota, Iowa, or Wisconsin, wherein a resident of this state may 
  5.14  legally fulfill the state's compulsory attendance laws, which is 
  5.15  not operated for profit, and which adheres to the provisions of 
  5.16  the Civil Rights Act of 1964 and chapter 363.  As used in this 
  5.17  clause, "textbooks" includes books and other instructional 
  5.18  materials and equipment used in elementary and secondary schools 
  5.19  in teaching only those subjects legally and commonly taught in 
  5.20  public elementary and secondary schools in this state.  
  5.21  "Textbooks" does not include instructional books and materials 
  5.22  used in the teaching of religious tenets, doctrines, or worship, 
  5.23  the purpose of which is to instill such tenets, doctrines, or 
  5.24  worship, nor does it include books or materials for, or 
  5.25  transportation to, extracurricular activities including sporting 
  5.26  events, musical or dramatic events, speech activities, driver's 
  5.27  education, or similar programs.  In order to qualify for the 
  5.28  subtraction under this clause the taxpayer must elect to itemize 
  5.29  deductions under section 63(e) of the Internal Revenue Code; 
  5.30     (4) to the extent included in federal taxable income, 
  5.31  distributions from a qualified governmental pension plan, an 
  5.32  individual retirement account, simplified employee pension, or 
  5.33  qualified plan covering a self-employed person that represent a 
  5.34  return of contributions that were included in Minnesota gross 
  5.35  income in the taxable year for which the contributions were made 
  5.36  but were deducted or were not included in the computation of 
  6.1   federal adjusted gross income.  The distribution shall be 
  6.2   allocated first to return of contributions until the 
  6.3   contributions included in Minnesota gross income have been 
  6.4   exhausted.  This subtraction applies only to contributions made 
  6.5   in a taxable year prior to 1985; 
  6.6      (5) income as provided under section 290.0802; 
  6.7      (6) the amount of unrecovered accelerated cost recovery 
  6.8   system deductions allowed under subdivision 19g; 
  6.9      (7) to the extent included in federal adjusted gross 
  6.10  income, income realized on disposition of property exempt from 
  6.11  tax under section 290.491; 
  6.12     (8) to the extent not deducted in determining federal 
  6.13  taxable income, the amount paid for health insurance of 
  6.14  self-employed individuals as determined under section 162(l) of 
  6.15  the Internal Revenue Code, except that the 25 percent limit does 
  6.16  not apply.  If the taxpayer deducted insurance payments under 
  6.17  section 213 of the Internal Revenue Code of 1986, the 
  6.18  subtraction under this clause must be reduced by the lesser of: 
  6.19     (i) the total itemized deductions allowed under section 
  6.20  63(d) of the Internal Revenue Code, less state, local, and 
  6.21  foreign income taxes deductible under section 164 of the 
  6.22  Internal Revenue Code and the standard deduction under section 
  6.23  63(c) of the Internal Revenue Code; or 
  6.24     (ii) the lesser of (A) the amount of insurance qualifying 
  6.25  as "medical care" under section 213(d) of the Internal Revenue 
  6.26  Code to the extent not deducted under section 162(1) of the 
  6.27  Internal Revenue Code or excluded from income or (B) the total 
  6.28  amount deductible for medical care under section 213(a); and 
  6.29     (9) the exemption amount allowed under Laws 1995, chapter 
  6.30  255, article 3, section 2, subdivision 3; and 
  6.31     (10) contributions to and investment income attributable to 
  6.32  medical savings accounts that meet the requirements of section 
  6.33  62Q.60. 
  6.34     Sec. 5.  [EFFECTIVE DATE.] 
  6.35     Section 1 is effective January 1, 1998.  Sections 2 to 4 
  6.36  are effective for tax years beginning after December 31, 1997.