Medical Savings Accounts

Establishes medical care savings accounts for workers'
compensation and other health care needs.

THE SENATE                              S.B. NO.           2176
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                     A BILL FOR AN ACT


 1      SECTION 1.  Chapter 87, Hawaii Revised Statutes, is amended
 2 by adding a new part to be appropriately designated and to read
 3 as follows:
 4             "PART        . MEDICAL SAVINGS ACCOUNTS
 5      87-  Definitions.  As used in this part:
 6      "Account administrator" means a state or federally chartered
 7 bank, savings bank, savings and loan association, credit union,
 8 or trust company authorized to act as a fiduciary; or a third
 9 party administrator licensed by the commissioner of financial
10 institutions.
11      "High-deductible health plan" means a health plan which in
12 the case of employee-only coverage, has an annual deductible of
13 $1,500 and annual out-of-pocket expenses not in excess of $3,000;
14 and in the case of employee and dependents coverage has an annual
15 deductible of $3,000 and annual out-of-pocket expenses not in
16 excess of $5,500.
17      "Medical savings account" means a trust created or organized
18 by the public employees health fund exclusively for the purpose
19 of paying the qualified medical expenses of an employee and the
20 employee's dependents.

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 1      "Medical savings account plan" means a plan that includes:
 2      (1)  The purchase by the public employees health fund of a
 3           high-deductible health plan for the benefit of an
 4           employee and the employee's dependents;
 5      (2)  The payment of moneys on behalf of an employee into a
 6           medical savings account by the employer of that
 7           employee; and
 8      (3)  An account administrator to administer the medical
 9           savings accounts and the reimbursement of qualified
10           medical expenses therefrom.
11      "Qualified medical expenses" means amounts paid by or on
12 behalf of an employee for medical care, defined as expenses
13 covered under a high-deductible health plan, for the employee or
14 the employee's dependents, but only to the extent the amounts are
15 not compensated for by insurance or otherwise.
16      87-    Medical savings accounts; established.  The public
17 employees health fund shall establish a medical savings account
18 plan option and shall establish rules and regulations that may be
19 deemed reasonable and necessary for the administration of a
20 medical savings plan.
21      87-    Medical savings accounts; purchase of high-
22 deductible health plan required.  In order to establish a medical
23 savings account plan, the public employees health fund shall

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 1 purchase a high-deductible health plan that provides basic
 2 benefits, extended basic benefits, and major medical expense
 3 benefits by indemnifying eligible employees for covered health
 4 care services and supplies through payments to providers or
 5 reimbursements to participants.
 6      87-    Public employees health fund; duties with regard to
 7 medical savings accounts.  For each employee who elects the
 8 medical savings account plan, the public employees health fund
 9 shall establish with an account administrator a medical savings
10 account into which, on the first day of each calendar year, or on
11 the date of enrollment in the program, as the case may be, the
12 employer of the employee shall make a payment on behalf of the
13 employee.  At the end of each calendar year, the account
14 administrator shall remit to each covered employee the balance
15 remaining in the individual employee's medical savings account.
16      87-    Use of medical savings accounts.  (a)  An account
17 administrator shall use the funds held in a medical savings
18 account solely for the purpose of paying the qualified medical
19 expenses of the employee or the employee's dependents.
20      (b)  The employee may submit documentation for qualified
21 medical expenses paid by on behalf of the employee during a
22 calendar year to the account administrator, and the account
23 administrator shall reimburse the employees for the qualified

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                                     S.B. NO.           2176

 1 medical expenses out of the medical savings account.
 2      (c)  Upon the death of the employee, the account
 3 administrator shall distribute the balance of the medical savings
 4 account to the estate of the employee, unless the employee has
 5 designated a beneficiary in writing to the account administrator,
 6 in which case the account administrator shall make the
 7 distribution to the designated beneficiary."
 8      SECTION 2.  This Act shall take effect upon its approval.
10                              INTRODUCED BY:______________________