 |
Home | Contact Us | Press Room | Site Overview | Help | Login | Register |
 |
 |
| About NCSL | State & Federal Issues | Legislatures | Legislative Staff | Meetings | Bookstore | Legislators & Staff Only |
| NCSL Home > State & Federal Issues: State-Federal Relations > | Add to MyNCSL |
|
NCSL HEALTH COMMITTEE BILL
SUMMARY:
The Health Insurance Portability and Accountability
Act of 1996
August 13, 1996 Staff Contact: Joy Johnson-Wilson (Phone: 202/624-8689; FAX: 202/737-1069; E-mail: joy.wilson@ncsl.org)
I. AT A GLANCE: The Health Insurance Portability and Accountability Act of 1996
A. Health Care Access, Portability, and Renewability (Title I) GROUP MARKET RULES B. Assuring Portability, Availability, and Renewability of Health Care Coverage (Title XXVII) GROUP MARKET REFORMS INDIVIDUAL MARKET REFORMS C. Preventing Health Care Fraud and Abuse: Administrative Simplification (Title II)
I. AT A GLANCE: The Health Insurance Portability and Accountability Act of 1996
The Act establishes federal standards for the availability and portability[1] of group and individual health insurance coverage. The provisions of the Act amend the Employee Retirement Income Security Act of 1974; the Public Health Service (PHS) Act; and the Internal Revenue Code (IRC) and affect coverage whether the coverage is provided through self-insured plans, group health insurance, through individual policies or by Health Maintenance Organizations (HMOs). The Act is designed to provide more options for maintaining health insurance for individuals that: change jobs (group-to-group); or lose jobs, become self-employed, or move to a company the does not provide health insurance (group-to-individual). The Act also limits the ability of employers or insurance issuers to impose preexisting condition exclusions or to use an individual's health status to deny coverage. The Act can be briefly summarized in terms of its effects on group and individual markets: Group Market Prohibits group health plans[2], insurance issuers[3] and Health Maintenance Organizations (HMOs)[4] from imposing preexisting condition exclusions for longer than 12 months (18 months for late enrollees) and requires them to provide credit to the individual for previous continuous coverage. Provides that preexisting condition exclusions cannot be imposed on newborns, newly adopted children, or pregnant women. Imposes a guaranteed issue[5] requirement on insurers in the small group (2-50 employees) market and a guaranteed renewability[6] requirement on both the small and large group markets. Individual Market Imposes a limited guaranteed issue and guaranteed renewability requirement on insurers in the individual market; Limits applicability of provisions to individuals: (1) with 18 or more months of previous continuous health coverage in the group market; (2) who are ineligible for any other group health care coverage; and (3) who have exhausted coverage under the Consolidated Omnibus Reconciliation Act of 1985 (COBRA)[7], if they were eligible for those benefits. Staff Contact: Joy Johnson-Wilson (phone: 202/624-8689; FAX: 202/737-1069; e-mail: joy.wilson@ncsl.org)
II. SUMMARY After weeks of wrangling over the "Four M's," ( Medical Savings Accounts or MSAs; Multi-Employer Welfare Associations (MEWAs); Medical liability reform; and Mental health parity) the House and Senate reached a compromise that is supported by the White House just before the summer Congressional recess. The conferees agreed to a four year, limited demonstration of a MSA program and dropped the remaining issues. Although this is a modest effort in comparison to the comprehensive health care reforms considered two years ago, the Act does establish a floor of protection for insured individuals and most importantly, from the state perspective, continues to both recognize and respect the role of states in the regulation of health insurance. For the most part, where states have higher standards or more stringent requirements, state law prevails. The Act: (1) increases portability for individuals that lose or change jobs; (2) limits the ability of employers or insurers to use preexisting medical conditions to deny coverage; (3) authorizes a four-year limited Medical Savings Account demonstration program; (4) phases-in an increase in the deductibility of health insurance costs for the self-employed from 30% to 80% in 2006; (5) provides tax incentives for individuals who purchase long term care insurance; (6) permits terminally ill and chronically ill individuals to receive benefits from life insurance tax-free; (7) strengthens federal health care fraud and abuse laws; and (8) establishes federal standards for the electronic transfer of medical information. Attached is a detailed summary of the access, portability, and renewability provisions of the Act. Also included is a brief summary of the other provisions.
A. Health Care Access, Portability, and Renewability (Title I) GROUP MARKET RULES Applicability The Act establishes federal requirements related to portability, access and renewability of health insurance on group health plans and health insurance issuers that provide group health insurance coverage. Exclusions Non-federal governmental plans may elect not to be a group health plan covered under the amendments to the PHS; however, such an election would apply for a single specified plan year or in the case of a plan governed by a collective bargaining agreement, for the term of the agreement. If a plan makes this selection, it must notify enrollees and must provide certification and disclosure of creditable coverage under the plan to enrollees who leave the plan. Limits on Preexisting Conditions A group health plan or health insurance issuer may only impose a preexisting condition exclusion if it relates to a condition for which medical advice, diagnosis, care or treatment was recommended or received within the six month period ending on the enrollment date. The preexisting condition exclusion is limited to 12 months, or 18 months for late enrollees. The preexisting condition period must be reduced by periods of creditable coverage. Health Maintenance Organizations (HMOs) may use affiliation periods of two months (three months for late enrollees) in lieu of a preexisting condition exclusion. Waiting or affiliation periods would run concurrently with any applicable preexisting condition exclusion period. Creditable Coverage Creditable coverage includes coverage of the individual under: (1) a group health plan, including church plans and governmental plans; (2) health insurance coverage, either group or individual insurance; (3) Medicare; (4) Medicaid; (5) military-sponsored health care; (6) a program of the Indian Health Service; (7) a state health benefits risk pool; (8) the Federal Employees Health Benefits Plan; (9) a public health plan, as defined in regulations; and (10) any other health benefit plan under section 5(e) of the Peace Corps Act. Report language establishes that it is the intent of Congress that the definition of creditable coverage is inclusive of short-term, limited coverage. The Act permits a lapse of coverage of 63 days before prior coverage is no longer "creditable." Group plans are required to count a period of creditable coverage without regard to the specific benefits covered under a plan unless the plan or issuer elects to credit based on coverage of benefits within certain specific classes or categories of benefits as specified in regulations.[8] An individual would establish creditable coverage by presenting certifications describing previous coverage. A group health plan must provide certification of prior coverage at the time an individual ceases to be covered under the plan, or becomes covered under a COBRA continuation policy. Certification, if requested, must be provided within a 24-month period. Upon request, Medicare, Medicaid, a program of the Indian Health Service or a tribal organization, and military-sponsored programs must also provide notice of previous creditable coverage. Health insurance coverage in periods before July 1, 1996 will be taken into account for purposes of determining creditable coverage, except that the Secretary of the U.S. Department of Labor is required to establish a process for individuals to acquire credit for coverage prior to that period. Anti-Discrimination The law prohibits the establishment of rules for eligibility based on health status-related factors.[9] Genetic information would not be considered a condition in the absence of a diagnosis of the condition related to the genetic information. Special Enrollment Periods Group health plans and health insurance issuers are required to provide for special enrollment periods in the following circumstances where an employee has lost other coverage: (1) the employee or dependent was already covered when the plan was previously offered; (2) the employee stared in writing at such time that another source of coverage was the reason for declining enrollment, but only if the plan sponsor or issuer required such a statement and provided the employee with notice of this requirement; (3) the person was covered under COBRA continuation coverage that was exhausted, or coverage was not under a continuation provision and was terminated as a result of a loss of eligibility for the coverage; and (4) the person requested enrollment no later than 30 days after the loss of other coverage. If a group plan offers dependent coverage, it must offer a special enrollment period for persons becoming a dependent through marriage, birth, adoption or placement for adoption. Guaranteed Renewability in Multiemployer Plans and Multiple Employer Welfare Arrangements Multiemployer plans and multiple employer welfare arrangements (MEWAs) are prohibited from denying an employer continued access to the same or different coverage under the terms of the plan except for: (1) nonpayment of contributions; (2) for fraud; (3) for noncompliance with plan provisions; (4) because the plan is ceasing to offer any coverage in a geographic area; (5) in the case of a network plan, there is no longer any individual enrolled through the employer who lives, resides, or works in the service area of the network plan, and the plan applies this provision uniformly without regard to health status-related factors; or (6) due to failure to meet the terms of an applicable collective bargaining agreements, to renew a collective bargaining agreement or other agreement requiring of authorizing contributions to the plan or to the employees covered by such an agreement. Regulations/Enforcement The Secretary of the U.S. Department of Labor is authorized to promulgate regulations, including interim final regulations, to carry out these provisions. The Secretary is not authorized to enforce any requirement against a health insurance issuer offering coverage in connection with a group health plan; however, private right of action under Part V of ERISA would apply to such issuers. Enforcement of provisions with respect to health insurance issuers would be limited to civil remedies established under the Public Health Services Act amendments. A state may enter into an agreement with the Secretary for the delegation of some or all of the Secretary's authority to enforce the requirements as they apply to MEWAs that are not group health plans. Preemption of State Laws/State Flexibility In general, the provisions do not supersede any provision of state law that establishes, implements, or continues any standard or requirement, solely relating to health insurance issuers in connection with group health insurance coverage, except to the extent that a standard or requirement prevents the application of a federal requirement. State laws related to preexisting conditions limitations that differ from the federal standards are preempted except where they provide for: (1) a shorter lookback period in determination of a preexisting condition limit, below the 6 month period established in the Act; (2) a shorter preexisting condition limit, below the 12 months for regular enrollees, and 18 months for late enrollees; (3) longer periods for lapses in coverage; (4) longer periods for newborn enrollment; (5) broader categories in which a preexisting condition limitation cannot be imposed; (6) additional special enrollment periods; or (7) a shorter maximum time period for the HMO affiliation period. Disclosure Beneficiaries must receive notice of material modifications to a plan, plan descriptions and summaries, as well as a statement of who is responsible for the financing and administration of the plan. Detailed below are more specific requirements based on the type of plan. ERISA-covered Plans - Provides for an amendment to the ERISA requirements related to summary plan descriptions to provide that if there is a material reduction in covered services or benefits, a summary of the changes must be provided to participants within 60 days after the date of its adoption. Alternatively, plan sponsors could provide descriptions at regular intervals of not more than 90 days. The Secretary of the U.S. Department of Labor is directed to promulgate regulations within 180 days of enactment that would provide alternative mechanisms, besides delivery by mail, for plan participants to receive notice of plan changes. Multiple Employer Welfare Associations That are Not Group Plans - The Secretary of the U.S. Department of Labor is permitted, in accordance with regulations prescribed by the Secretary, to require MEWAs that provide medical benefits, but are not group health plans, to report to the Secretary, not more than once a year, so the Secretary can determine that the provisions of the Act are being carried out.
B. Assuring, Portability, Availability, and Renewability of Health Insurance Coverage (Title XXVII) GROUP MARKET REFORMS Guaranteed Availability of Coverage/Small Group Market The law requires all health insurance issuers that offer small group coverage to accept every small employer in the state that applies for coverage. [10] Carriers that make coverage available only through "bona fide associations" are not required to make that coverage available to groups outside the association.[11] An exception to the guaranteed availability requirement is authorized in cases where the plan fails to meet the participation or contribution rules of the issuer, provided these rules are in accordance with state law. Exceptions to Guaranteed Availability of Coverage in the Small Group Market Network Plans - Health insurance issuers offering coverage to the small group market through a network plan could limit coverage to employers with employees who live, work, or reside in the service area for the network plan. Capacity Limitations - Health insurance issuers offering coverage to the small group market through a network plan could deny coverage to small employers if the issuer has demonstrated, if required, to the appropriate state authority, the lack of capacity to deliver services adequately to additional groups. If an issuer denies coverage due to lack of capacity, it must apply the capacity limit uniformly to all employers without regard to claims experience or any other health-related factor. An issuer denying coverage on the basis of insufficient capacity, may not offer coverage in the small group market, in the service area, for a six month period. Insufficient Financial Reserves - A health insurance issuer may deny coverage in the small group market if the issuer has demonstrated, if required, to the appropriate state authority that it does not have the financial reserves necessary to underwrite additional coverage. Guaranteed Availability of Coverage/Large Group Market There is no comparable provision for guaranteed availability of coverage in the large group market. Instead, the Secretary of the U.S. Department of Health and Human Services is directed to request that the governor of each state submit a report on the access of large employers to health insurance coverage. These reports are to be submitted no later than December 31, 2000 and would be submitted every three years thereafter. Based on the information received from the state reports, the Secretary is directed to report to Congress on the access to health insurance for large employers, every three years. Finally, the Comptroller General is directed to submit a report to Congress, no later than February 2, 1998, on the access of classes of large employers to health insurance coverage in the different states. Guaranteed Renewability of Coverage for Employers in the Group Market Health insurance issuers must renew policies. This provision applies to both the small group and large group market. Exceptions to the Guaranteed Renewability of Coverage Requirements Exceptions to the guaranteed renewability provisions are provided for one or more of the following circumstances: (1) nonpayment of premiums; (2) fraud; (3) violation of participation or contribution rules; (4) termination of coverage in the market, in accordance with applicable state law; (5) for network plans, no enrollees connected to the plan live, reside, or work in the service area of the issuer; (6) for coverage to bona fide associations, if membership in the association ceases, but only if coverage is terminated uniformly without regard to health-related factors regarding any individual. Discontinuance of a Type of Policy - If the issuer or plan no longer offers a particular type of group coverage in the small or large group market, so long as the issuer, in accordance with applicable state law: (1) provided prior notice to each plan sponsor, participants and beneficiaries; (2) gave the plan sponsor the chance to purchase all (or in the case of a large group market, any) other plans offered by the issuer in such market ; and (3) applied the termination uniformly. Discontinuance of All Coverage - If the issuer or plan discontinues all coverage. In this case, the issuer could not offer coverage in the market and state involved for five years. Exceptions to the Requirements Regarding Availability, Renewability, and Portability Benefits For Medical Care Secondary Or Incidental To Other Insurance Benefits - Requirements would not apply to the following types of coverage: (1) accident, or disability insurance, or any combination thereof; (2) supplements to liability insurance; (3) liability insurance; (4) workers compensation or similar insurance; (5) automobile medical payment insurance; (6) credit-only insurance; (7) coverage for on-site medical clinics; and (8) other similar coverage as specified in regulations. Separate Policy, Certificate Or Contract Of Insurance - Requirements would not apply to: (1) Medicare supplemental health insurance; (2) coverage supplemental to coverage provided under military health care; and (3) similar supplemental coverage provided to coverage under a group health plan. Separate Policy, Certificate or Contract of Insurance/Benefits are Not an Integral Part of the Group Health Plan - Requirements would not apply to: (1) limited scope vision and dental benefits; (2) benefits for long term care; (3) nursing home care; (4) home health care; (5) community-based care; (6) or any combination thereof; or similar limited benefits as specified by regulation. Separate Policy, Certificate, Or Contract Of Insurance/No Coordination Of Benefits - Requirements would not apply to: (1) coverage limited to a specified disease or illness; or (2) hospital indemnity or other fixed indemnity insurance. Enforcement States are authorized to require health insurance issuers to meet the requirements of this title. If the Secretary of the U.S. Department of Health and Human Services determines that a state has failed to substantially enforce a provision or provisions of this title, the Secretary is authorized to enforce those provisions. Preemption According to the Conference Report, the Congress intended, "...the narrowest of preemptions." Any provision of state law that establishes, implements, or continues in effect any standard or requirement, solely relating to health insurance issuers in connection with group health insurance coverage, would not be preempted unless the standard or requirement prevents the application of a federal requirement. For example, if state law defines "small employer" more broadly than the Act (i.e. between 2-100 employees), the state law definition would supersede the more limited federal definition (between 2-50 employees). Disclosure Requirements Health Plan Issuers - Health plan issuers are required to make the availabililty of plan information known to small employers and must make certain that the information can be easily understood by the average small employer and is sufficient to reasonably inform them of their rights and obligations. Regulations The Secretary of the U.S. Department of Health and Human Services is authorized to promulgate regulations necessary to carry out the provisions of this title. INDIVIDUAL MARKET REFORMS Qualified Individuals Under the provisions of the Act, a qualified individual is an individual who: (1) has 18 or more months of creditable coverage, with the most recent coverage from a group health plan, governmental plan, or church plan, or other group[ health insurance offered in connection with any such plan; (2) is ineligible for group health coverage, Medicare Parts A or B, Medicaid, including any successor program to Medicaid, (3) has no other health insurance coverage and has not been terminated from their most recent prior coverage for nonpayment of premiums or fraud, or (4) has exhausted continuation benefits under COBRA or a similar state program, if they were eligible to receive those benefits. Qualified Coverage Individual health insurance issuers are required to offer coverage to eligible individuals under all policy forms, with certain exceptions. A issuer may not offer coverage under all policy forms if the state is implementing an acceptable alternative mechanism. [See "Acceptable Alternative State Mechanisms"] If a state is not implementing an acceptable alternative mechanism, an issuer may elect to limit offered policy forms, provided they offer at least two different policy forms, both designed for and actively marketed in the individual group market. In addition, the policy forms must meet one of the following: (1) the two policy forms have the largest and next to the largest premium volume; or (2) the two policy forms are representative of individual health insurance coverage offered by the issuer. Issuers must apply the election uniformly to all individuals in the state for that issuer, and the election must be effective for at least two years. Levels of Coverage The two representative policies would include a lower and a higher level of coverage, each of which has benefits similar to other individual health insurance policies offered by the issuer in the state. The lower-level policy form would have benefits with an actuarial value at least 85 percent, but not greater than 100 percent of the weighted average benefit.[12] The higher-level policy form would have an actuarial value: (1) at least 15 percent greater than the actuarial value of the lower-level policy form; and (2) between 100 and 120 percent of the weighted average benefit. Guaranteed Renewability Individual health insurance issuers are required to renew coverage, except for coverage made available through associations. At the time of coverage renewal, a health insurance issuer may modify the health insurance coverage for a policy form as long as the modification is consistent with state law and is effective on a uniform basis among all individuals with that policy form. The exceptions to the guaranteed renewability provisions in the individual market are the same as those authorized for the small group market. Exceptions to Guaranteed Renewability Similar to the exceptions provided for in the small group market. Exceptions are permitted for network plans, issuers with capacity limitations, and issuers that cannot meet financial reserve requirements. Denials of coverage related to the capacity limitations of the issuer result in a 180 day prohibition of that issuer to offer coverage in the individual market in the service area. Similar prohibitions apply in cases where the issuer fails to meet financial reserve requirements. Alternative State Mechanisms The federal requirements described in this title do not apply to individual health insurance coverage offered in the individual market in a state, provided the state is found to be implementing an alternative mechanism in which: (1) all eligible individuals are provided a choice of health insurance coverage; (2) such coverage does not impose any preexisting condition exclusions; (3) the choice of coverage includes at least one policy form of coverage that is comparable to comprehensive health insurance coverage offered in the individual market or a standard option of coverage available under the group or individual health insurance laws of the state. States that elect to implement the following mechanisms, must also meet the preceding requirements: (1) the National Association of Insurance Commissioner's (NAIC) Small Employer and Individual Health Insurance Availability Act (as it applies to individual coverage): or (2) a qualified high risk pool; (3) an alternative mechanism which includes risk adjustment, risk spreading or a risk spreading mechanism; or provides some financial subsidies for participating insurers or eligible individuals; or (4) a mechanism under which each eligible individual is provided a choice of all individual health insurance coverage otherwise available.[13][14] A state is presumed to be implementing an acceptable alternative mechanism as of January 1, 1998. The governor of each state is required to notify the Secretary of the U.S. Department of Health and Human Services by July 1, 1997, that the state has enacted or will have enacted all necessary legislation by the January 1998 deadline. Each state must report to the Secretary every three years to retain the presumption of compliance. If a state submits notice and information after July 1, 1997, and the Secretary makes no determination within 90 days, the mechanism will be considered acceptable after 90 days. Failure to Adopt an Acceptable State Alternative Mechanism If the Secretary the U.S. Department of Health and Human Services determines that a state mechanism is not acceptable or is not being implemented, the Secretary must notify the state of the preliminary determination and the consequences of failure to comply. The state will then be given a reasonable opportunity to modify its existing mechanism or to adopt a new one. If the Secretary makes a final determination that the state mechanism is not acceptable, the Secretary must notify the state of the effective date of the imposition of the federal requirements for guaranteed availability. Each insurer in the state would then be required to guarantee issue health insurance to any qualified individual according the provisions of the Act. The authority of the Secretary is limited to determinations based only on whether the state mechanism is acceptable and is being implemented. Enforcement Each state may require that health insurance issuers that issue, sell, renew or offer health insurance coverage in the state in the individual market to meet the requirements established under the Act. If a state fails to substantially enforce the requirements, the Secretary of the U.S. Department of Health and Human Services is authorized to enforce them. Preemption Nothing in this part prevents a state from establishing, implementing or continuing in effect standards and requirements unless they prevent the application of a federal requirement. This part (Title XXVII) does not amend or affect ERISA.
C. Preventing Health Care Fraud and Abuse: Administrative Simplification (Title II) Fraud and Abuse Control Program - The Secretary of the U.S. Department of Health and Human Services, through the office of the Inspector General, and the Attorney General are directed to jointly establish a national health care fraud and abuse control program to coordinate federal, state, and local government efforts to combat fraud and abuse related to health plans. The Act also establishes a Medicare Integrity Program and a Beneficiary Incentive Program. Revisions to Current Sanctions for Fraud and Abuse - The provisions of this section increase the number and scope of existing sanctions. For example, the Act: (1) requires the Secretary of the U.S. Department of Health and Human Services to exclude individuals who have been convicted of a felony offense related to health care fraud from Medicare and state health programs for a minimum of five years; (2) permits the Secretary to exclude individuals with an ownership control or interest in a sanctioned entity; and (3) makes the knowing and willful transfer of assets in order to become eligible for the Medicaid program an offense punishable by a fine of not more than $25,000 or a prison term of not more than 5 years, or both. Advisory Opinions - The Secretary of the U.S. Department of Health and Human Services is required to issue, upon request, advisory opinions, that would provide binding opinions to providers regarding whether or not arrangements and transactions under consideration violate the federal anti-kickback statute. These opinions must be issued within 60 days. This provision is effective for request submitted 6 months after enactment. The provision sunsets 4 years from the date of enactment. Data Collection - The Secretary of the U.S. Department of Health and Human Services is directed to establish a national health care fraud and abuse data collection program that would report final action taken against health care practitioners, providers and suppliers. Civil and Monetary Penalties - Increases the amount of the penalties and expands the scope and number of practices that are considered prohibited practices. The Act also extends the current law federal anti-kickback statute to cover all federal health programs except for the Federal Employees Health Benefits Program (FEHBP). Revisions to Criminal Law - Provides that violations of law that relate to any public or private health plan affecting commerce under any medical benefit, item or service provided to an individual is a federal crime. Administrative Simplification - Establishes federal standards and requirements for the electronic transfer of certain medical information. Specifically permits the electronic transfer of information that includes individual identifying information. The Secretary of the U.S. Department of Health and Human Services is directed to recommend standards for the electronic transfer of medical information that includes individual identifying information. Duplication and Coordination of Medicare-Related Plans - Allows policies that provide for long term care or nursing home, home health or community-based care to coordinate benefits with the Medicare program without being considered a duplicative policy. In addition, policies that provide health care benefits without regard to other health coverage would also not be considered duplicative. Current law disclosure requirements were modified.
D. Tax-Related Provisions (Title III) Medical Savings Accounts - Beginning in 1997, MSAs are available to employees, covered under an employer-sponsored, high deductible plan of a small employer (50 or fewer employees), or self-employed individuals. There is an annual limit of 750,000 policies. To be eligible to participate, an individual must be covered under an employer-sponsored, high deductible health plan ($1,500 -$2,250 for individuals and $3,000 -$4,500 for families) and must have no other health insurance coverage. Contributions (up to 65% of deductible for individuals and 75% for families) to the MSA can be made by either the individual or the individual's employer; however, an employee cannot make a contribution to an MSA in a year if the individual's employer has made a contribution in that year. Self-employed individuals must also be covered under a high deductible health plan and must have no other coverage, with certain exceptions, to be eligible to participate. Individuals can withdraw funds from the account to cover medical expenses that would qualify as an itemized medical deduction for income tax purposes. Increase in Deduction of Health Insurance Costs of Self-Employed Individuals - Phases-in an increase in the deductibility of health insurance costs for self-employed individuals from 30% in 1996 to 80% in 2006. The deduction would increase from 30% in 1996 to: 40% in 1997; 45% in 1998; 50% in 2003; 60% in 2004; 70% in 2005; and 80% in 2006 and thereafter. Long Term Care Services and Contracts - Contributions by an employer and amounts received by a taxpayer, under a long term care insurance plan, up to $175 per diem or $63,875 annually, is excludable from an employee's income. This permits individuals to receive the same benefit as is currently available for health and accident insurance. Premiums for long term care insurance are treated as other medical deductions and are subject to the overall 7.5 percent of Adjusted Gross Income (AGI) limitation on medical expenses. Treatment of Accelerated Death Benefits - Permits chronically and terminally ill individuals to receive the benefits from their life insurance policies before they die. Amounts received would be excludable from taxable income. State Insurance Pools - Provides tax-exempt status to any membership organization, established by a state, that provides health insurance coverage either through insurance or through a Health Maintenance Organization (HMO), to medically "high risk" individuals. Organizations Subject to Section 833 - Extends tax-exempt status, previously applicable only to Blue Cross/Blue Shield plans, to certain other plans. Penalty-free Withdrawals from IRAs for Medical Expenses - Under current law, individuals are permitted to take early withdrawals from employer-sponsored, tax-qualified pension plans, to cover medical expenses above 7.5% of their AGI without incurring the 10% tax penalty that would normally apply to early withdrawals. This provision extends this provision to Individual Retirement Accounts (IRAs). If an individual has been unemployed and receiving unemployment compensation under state or federal law for at least 12 weeks, the individual could take an early withdrawal for medical insurance from the IRA without regard to the 7.5% AGI floor. Organ and Tissue Donation Information Included With Income Tax Refund Payments - The U.S. Department of the Treasury is required to include in any payment of a refund for individual income taxes, information on organ and tissue donation. To the extent practicable, organ donor cards are to be included in the mailing. This provision is effective between February 1, 1997 and June 30, 1997.
NOTES
Staff Contact: Joy Johnson-Wilson (phone: 202/624-8689; FAX: 202/737-1069; e-mail: joy.wilson@ncsl.org) |
© 2008 National Conference of State Legislatures, All Rights Reserved
Denver Office: Tel: 303-364-7700 | Fax: 303-364-7800 | 7700 East First Place | Denver, CO 80230 | Map
Washington Office: Tel: 202-624-5400 | Fax: 202-737-1069 | 444 North Capitol Street, N.W., Suite 515 | Washington, D.C. 20001
