by Fred Adams
Vice President
HSA for America

California Health Savings Account Legislation

On February 9, California State Senator Abel Maldonado, Santa Maria (Santa Barbara County), reintroduced a bill in the California Legislature that would conform California tax law to the federal law that created health care savings accounts.

Health Savings Accounts, also known as HSAs, are savings accounts where people who have a qualifying high-deductible health insurance plan can place tax-deductible money, that can then be use to pay for medical expenses at anytime in the future, tax free.  In most states the money deposited into a Health Savings Account is also deductible on state income taxes.

Currently, California does not conform to the federal law.  Californians who open HSAs will get no state-tax benefits.  They will, however, have big record-keeping headaches, since they will have state income tax on the initial deposit, but none on the gain, yet no Federal income tax on the initial deposit or gain.

Maldonado introduced a tax-conformity bill last year, when he was in the Assembly, but it went nowhere.  The new bill, SB173, also adds a tax credit for employers who have not offered health insurance in the past but begin offering health savings accounts.

For more information about Health Savings Accounts, and qualifying high-deductible health insurance plans available in California, visit HSA for America.

HSA for America
749 S. Lemay Ave, Suite A3-116
Fort Collins, CO 80524
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