Current Status Bill Number:331 Type of Legislation:General Bill GB Introducing Body:Senate Introduced Date:19950110 Primary Sponsor:Wilson All Sponsors:Wilson Drafted Document Number:pt\1554ac.95 Companion Bill Number:167, 3326 Residing Body:Senate Current Committee:Finance Committee 06 SF Subject:Individual Medical Accounts
Body Date Action Description Com Leg Involved
______ ________ _______________________________________ _______ ____________
Senate 19950329 Committed to Committee 06 SF
Senate 19950329 Recalled from Committee 13 SMA
Senate 19950110 Introduced, read first time, 13 SMA
referred to Committee
View additional legislative information at the LPITS web site.
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:
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 1995.