PA Clears Way for High Deductible Health Plans Linked to HSAs

July 19, 2005 ( - Pennsylvania Governor Ed Rendell has signed into law a bill that will allow commercial insurers to offer health savings accounts (HSAs) linked to high deductible health plans (HDHP).

According to a Business Insurance report, there was a conflict between the federal law that created HSAs and a Pennsylvania law that mandates first-dollar coverage (no deductible) for metabolic disorders.   The report notes that, under federal law, the HDHP linked to the HSA generally cannot provide coverage until a deductible of $1,000 for single coverage and $2,000 for family coverage is satisfied.

The bill, HB 107, exempts HDHPs linked to HSAs from any state benefit mandate that would prevent insurers from offering the arrangement, thus eliminating the conflict with Pennsylvania’s first-dollar mandate for metabolic disorders, according to the report.

The bill also says that funds taken from an HSA for qualified medical expenses are exempt from state income taxes.   According to Business Insurance, a provision that would have excluded HSA contributions made by employees or employers from employees’ taxable income was cut from the bill.