S 649 Session 109 (1991-1992)
S 0649 General Bill, By M.T. Rose
A Bill to create the Individual Medical Account Act to allow 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
02/13/91 Senate Introduced and read first time SJ-4
02/13/91 Senate Referred to Committee on Finance SJ-4
A BILL
TO CREATE THE INDIVIDUAL MEDICAL ACCOUNT ACT TO
ALLOW 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. This act may be cited as the "Individual Medical
Account Act".
SECTION 2. As used in this act:
(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 3. (A) For taxable years beginning after 1991, a resident
individual must be allowed to deposit contributions to his individual
medical account. The amount of deposit for the first taxable year
subsequent to the effective date of this act 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 4. The 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 5. 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 6(1).
SECTION 6. 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 7. 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 8. This act takes effect upon approval by the Governor.
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