BANKS AND BANKING;

INSURANCE - HEALTH; BANKS;

You asked how many states have enacted medical savings account (MSA) legislation.

Although various types of MSA insurance products have been available for the past decade or so at the state level, the Health Insurance Portability and Accountability Act (HIPAA) of 1996 authorized the first federal program, a demonstration project, allowing federal tax breaks on multiyear savings accounts established for medical purposes.

Nineteen states have enacted an MSA-enabling law that allows state income tax deductions for any MSA contributions (Arizona, California, Colorado, Idaho, Illinois, Indiana, Louisiana, Michigan, Mississippi, Missouri, Nevada, Montana, New Mexico, Ohio, Oklahoma, Pennsylvania, Utah, Washington, and West Virginia).

Seven states have approved more narrow MSA laws that accommodated participants in the HIPAA MSA program by providing them with state income tax deductions for their MSA contributions (Arkansas, Florida, Maryland, Nebraska, New Jersey, Oregon, and Wyoming). However, those states did not enact statewide MSA tax advantages for people owning other types of MSAs.

Two additional states (Montana, and Texas) have approved only Medicaid MSA demonstration projects.

Two other states, Virginia and Wisconsin, provided new advantages for MSAs under state tax law that remained contingent on passage of a full federal MSA law (the federal MSA demonstration project enacted in 1996 did not trigger this provision). In addition, as of December 2000, 14 states (including Virginia and Wisconsin) had adopted resolutions calling on Congress to enact full MSAs at the federal level.

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