S 171 Session 110 (1993-1994)
S 0171 General Bill, By M.T. Rose
A Bill to amend Title 44 of the 1976 Code by adding Chapter 117 so as to
create the Individual Medical Account Act allowing a person to deposit funds
in an account established as a trust for the purpose of paying the medical,
dental, and long-term care expenses of the account holder and to provide for
the duties of the trustee, to provide a tax exemption on interest earned, and
to provide for the withdrawal of funds.
01/12/93 Senate Introduced and read first time SJ-71
01/12/93 Senate Referred to Committee on Finance SJ-71
A BILL
TO AMEND TITLE 44 OF THE 1976 CODE BY ADDING
CHAPTER 117 SO AS TO CREATE THE INDIVIDUAL MEDICAL
ACCOUNT ACT ALLOWING A PERSON TO DEPOSIT FUNDS IN
AN ACCOUNT ESTABLISHED AS A TRUST FOR THE PURPOSE
OF PAYING THE MEDICAL, DENTAL, AND LONG-TERM CARE
EXPENSES OF THE ACCOUNT HOLDER AND TO PROVIDE
FOR THE DUTIES OF THE TRUSTEE, TO PROVIDE A TAX
EXEMPTION ON INTEREST EARNED, AND TO PROVIDE FOR
THE WITHDRAWAL OF FUNDS.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 44 of the 1976 Code is amended by adding:
"CHAPTER 117
Individual Medical Accounts
Section 44-117-10. This chapter may be cited as the `Individual
Medical Account Act'.
Section 44-117-20. As used in this chapter:
(1) `Account holder' means the individual on whose behalf the
individual medical account is established.
(2) `Dependent child' means a person under the age of twenty-one
years or a person who is entitled legally or subject to a court order for
the provision of proper and necessary subsistence, education, medical
care, or any other care necessary for his health, guidance, or well-being and who is not otherwise emancipated, married, or a member of
the armed forces of the United States, or who is mentally or physically
incapacitated and cannot provide for himself.
(3) `Individual medical account' means a trust created or organized
to pay the eligible medical, dental, and long-term care expenses of the
account holder.
(4) `Trustee' means a chartered state bank, savings and loan
association, or trust company authorized to act as a fiduciary, a
national banking association or savings and loan association authorized
to act as a fiduciary, or an insurance company.
Section 44-117-30. (A) A resident individual may establish and
make contributions to an individual medical account pursuant to this
chapter. The amount of deposit for the first taxable year subsequent
to the effective date of this chapter may not exceed:
(1) two thousand dollars for the account holder; or
(2) two thousand dollars for the account holder and one
thousand dollars for each dependent child of the account holder.
(B) The maximum allowable amount of deposit for subsequent
years must be increased annually by a percentage equal to the previous
year's increase in the national Consumer Price Index.
(C) Interest earned on an individual medical account is exempt
from taxation as adjusted gross income in this State.
Section 44-117-40. An individual medical account must be
established as a trust under the laws of this State and placed with a
trustee. The trustee shall:
(1) purchase long-term care coverage for each account holder to
cover all medical, dental, and long-term care expenses in excess of ten
thousand dollars; and
(2) utilize the trust assets solely for the purpose of paying the
medical, dental, and long-term care expenses of the account holder. Section 44-117-50. Upon written agreement between an employer
and employee, an employer either may contribute to the employee's
individual medical account or continue to make contributions under
the employee's existing health insurance policy or program, subject to
the restrictions in Section 44-117-60.
Section 44-117-60. Individual medical account funds may be
withdrawn by the account holder at any time for any purpose, subject
to the following restrictions and penalties:
(1) There is a distribution penalty for early withdrawal of
individual medical account funds by the account holder. The penalty
is ten percent of the amount of interest earned as of the date of
withdrawal on the account and, upon the withdrawal, the interest
earned during the tax year in which withdrawal occurs is subject to
taxation as adjusted gross income in this State.
(2) After an account holder reaches sixty years of age, withdrawals
are permitted for medical, dental, or long-term care expenses only and
may be withdrawn without penalty.
Section 44-117-70. Upon the death of the account holder, the
account principle, as well as any interest accumulated, must be
distributed to the decedent's estate and taxed as part of the
estate."
SECTION 2. This act takes effect upon approval by the Governor
and is applicable for tax years beginning after 1993.
-----XX----- |