HB101 Alabama 2010 Session

Summary

Primary Sponsor

Gregory Canfield

Republican

Co-Sponsors

Mike BallPaul DeMarcoJack WilliamsDickie DrakeAllen Treadaway

Session

Regular Session 2010

Title

Medical savings accounts, established, limits on deductible amounts contributed, interest excluded from gross income, use of funds, withdrawals, distribution upon death of account holder, Medical Savings Account Act

Summary

HB101 would create Medical Savings Accounts in Alabama linked to high-deductible health plans, with tax advantages and rules for contributions, use of funds, and distributions.

What This Bill Does

It authorizes residents and employers to establish Medical Savings Accounts (MSAs) tied to qualified high-deductible health plans (HDHPs) and sets funding rules, including employer or individual contributions and premium-reduction-based funding. It provides that principal contributions and earned interest are excluded from gross income, with contributions limited by the HDHP deductible levels. It allows funds to pay eligible medical expenses for the account holder and dependents or to fund HDHP coverage, and it describes how distributions are handled at death. It also allows unspent funds above the higher deductible to be withdrawn with tax consequences, and establishes an effective date for the act.

Who It Affects

• Resident individuals (and their dependents) who open an MSA and participate in an HDHP, benefiting from tax-advantaged saving for medical expenses.
• Employers and account administrators who implement and manage the MSA program and HDHP offerings, including funding through premiums and administering reimbursements.

Key Provisions

• Establishes Medical Savings Account programs linked to qualified higher deductible health plans (HDHPs) and defines roles (account holder, account administrator) and eligible expenses.
• Imposes limits on contributions to an MSA based on the HDHP deductible levels and allows funding by either an employer or a resident individual, with at least a portion tied to premium reductions realized from the HDHP.
• Provides tax treatment: principal contributed and interest earned on an MSA are excluded from gross income; withdrawals for eligible medical expenses are reimbursed tax-free; non-medical withdrawals may be taxed as gross income.
• Defines use and distribution rules, including reimbursement for eligible medical expenses for the holder or dependents, death distributions to the estate or a designated beneficiary, and conditions under which unspent funds may be withdrawn with tax consequences.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Medical Savings Accounts