Insurance Group Releases HSA Implementation Scorecard

August 23, 2005 ( - Two states have made worker contributions to health savings accounts free from state tax while another 10 are moving to do the same via new legislative proposals.

A news release from the Council for Affordable Health Insurance (CAHI) said Arkansas and Mississippi have approved legislation enabling the HSA tax-free status.

CAHI said in the survey report that California, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, Ohio, Pennsylvania, Wisconsin, and Maine are considering legislation to provide tax relief for HSA contributions. The issue is moot in another six states – Alaska, Florida, South Dakota, Texas, Washington, and Wyoming – because they don’t currently levy a state income tax.

Several states also have introduced legislation allowing their employees to enroll in state-sponsored HSAs, according to the report. Florida already has enacted such a law, it added. States considering this move include Alaska, Iowa, Kentucky, Maine, Michigan, Minnesota, Montana, New Hampshire, Oregon, Oklahoma, Rhode Island, Texas, Washington, and Wisconsin, the report said.

CAHI found many states have laws that conflict with HSA requirements, which the group said hinders insurers’ ability to offer these health insurance products. Simply because a federal bill becomes law “doesn’t mean that implementation will go smoothly in the states,” the report said. “Since each state regulates the health insurance industry and products for its state residents, issues can arise. However, the issues highlighted in this document are easily rectified with the appropriate legislation and would greatly enhance people’s access to HSAs and affordable coverage.”

Meanwhile, 11 states have adopted HSAs for their high-risk pool plans and two are considering legislation to do so, the report said. Iowa passed a law adding HSAs to its Medicaid program and South Carolina is awaiting approval from the Centers for Medicare and Medicaid Services for a similar plan, the report indicated. Florida also is considering such an action, it added.

CAHI is a research and advocacy organization of insurance carriers in the individual and small group markets that is based in Alexandria, Virginia.