Relates to high deductible health plans and health savings accounts

• Democratic2

◆ The sponsor's argument

Why Jamaal Bailey says this is needed

Health Savings Accounts (HSAs) are trust/custodial bank accounts similar to IRAs. HSAs are an additional tool for consumers to manage the high cost of health care for themselves and their families. Contributions to an HSA are tax-deductible from income and/or "pre-tax" when made by an employer or by employees via payroll deduction. HSA funds may be used tax-free for IRS-approved health expenses. The funds belong to the account owner, and the HSA is portable. HSAs were created in 2003 in Section 223 of the federal Internal Revenue Code. The rules for HSAs are interpreted and administered by the federal Internal Revenue Service (IRS). Per IRS rules, adults may contribute to an HSA only if they are enrolled in an "HSA-qualified" health insurance plan and do not have other cover- age that disqualifies them. HSA-qualified plans must: (1) apply a minimum deductible to all covered benefits (medical plus pharmacy) that are not "preventive care" under IRS Rules, which general- ly follow the Affordable Care Act definitions based on recommendations by the U.S. Preventive Services Task Force and other advisory groups; and (2) limit annual out-of-pocket expenses, including all cost-sharing, for covered benefits. Minimum deductibles and out-of-pocket limits are prescribed by federal law. State health insurance mandates can conflict with federal requirements for HSA-qualified plans. Although they may be well-intended, state mandates can have an unintended impact on HSAs. This takes place when benefit mandate bills require that health insurers cover certain treat- ments or services without cost-sharing for enrollees, or otherwise place restrictions on cost-sharing, whether co-pays, deductibles, etc. Because federal law only allows zero or reduced cost-sharing for "preventive care" services, state mandates that require HSA-qualified plans to cover specific benefits, that are not recognized as "preventive care" by the IRS, without any cost-sharing, is problematic for these plans. Through this legislation, New York would join approximately 14 other states that have already enacted such a provision which was endorsed in November 2023 at a national meeting of the National Council of Insurance Legislators. This clarification is necessary to ensure that consumers, insureds/enrollees, and HSA owners may continue to fund their HSAs to pay for qualified medical expenses on a tax-advantaged basis.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.