2098-S AMH PADD BURK 1

SHB 2098 - H AMDS 000461 BEYOND SCOPE & OBJECT OF BILL 4-17-93

By Representatives Padden and Dyer

     On page 17, after line 12, insert the following:

     "NEW SECTION. Sec. 15.  A new section is added to Title 48 RCW to read as follows:

     (1)  The individual medical account act program is established for state and school district employees.  The state insurance commissioner shall administer this program and shall promulgate necessary rules pursuant to chapter 34.05 RCW.  State and school district employees shall have the option of participating in the individual medical account program.

     (2)  For the purposes of this section the following definitions apply:

     (a)  "Account holder" means the individual on whose behalf the individual medical account is established.

     (b)  "Dependent child" means any person under the age of twenty-one years or any person who is legally entitled or subject to a court order for the provision of proper and necessary subsistence, education, medical care, chiropractic care, or any other care necessary for their 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 so mentally or physically incapacitated.

     (c)  "Individual medical account" means a trust created or organized to pay the eligible medical, chiropractic, dental, and long-term care expenses of the account holder.

     (d)  "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.

     (e)  "Employee" means a state employee or school district employee.

     (3) (a) For taxable years beginning on or after the effective date of this act, an employee shall be allowed to deposit contributions to an individual medical account.  The amount of deposit for the first taxable year subsequent to the effective date of the act shall not exceed:

     (i)   Two thousand dollars for the account holder;

     (ii)  Two thousand dollars for the account holder and two thousand dollars for the spouse of the account holder;

     (iii) Two thousand dollars for the account holder, two thousand dollars for the spouse of the account holder, and one thousand dollars for each dependent child of the account holder; or

     (iv)  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 shall be increased annually by a percentage equal to the previous year's increase in the national consumer price index.

     (c)  Upon agreement between an employer and employee, an employer 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, however, to the restrictions in subsection (e)(i) of this section.

     (d)  The individual medical account shall be established as a trust under the laws of this state and placed with a trustee.  The trustee shall:

     (i)  Purchase long-term care coverage for each account holder to cover all medical, chiropractic, dental, and long-term care expenses in excess of ten thousand dollars; and

     (ii) Utilize the trust assets solely for the purpose of paying the medical, chiropractic, dental, and long-term care expenses of the account holder.

     (e)  Individual medical account funds may be withdrawn by the account holder at any time for any purpose, subject to the following restrictions and penalties:

     (i)  There shall be a distribution penalty for withdrawal of individual medical account funds by the account holder.  Such penalty shall be 10 percent of the amount of interest earned as of the date of withdrawal on the account.

     (ii)  After an account holder reaches 60 years of age, withdrawals shall be permitted for medical, chiropractic, dental or long-term care expenses only, and may be withdrawn without penalty.

     (f)  Upon the death of the account holder, the account principle, as well as any interest accumulated thereon, shall be distributed to the decedent's estate as part of the estate."

     On page 17, line 13, strike "Sec. 15.  This act is" and insert "Sec. 16.  Sections 1 through 14 of this act are"

EFFECT:  Creates the individual medical account program and authorizes individual state and school district employees to participate in the program.

                          --- END ---