NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5367A
SPONSOR: Weprin TITLE OF BILL:
An act to amend the insurance law, in relation to high deductible health
plans and health savings accounts
PURPOSE:
The bill would amend the Insurance Law to clarify that with respect to
the application of any cost-sharing requirements adopted by the state
for health insurance plans, policies and coverages, if the application
of those requirements would prevent HSA-qualified plans from meeting the
requirements under federal law (26 U.S. Code section 223), the relevant
requirement would only apply to HSA-qualified plans after the federal
required minimum deductible has been met. However, this exception would
not apply to items or services considered "preventive care" by the IRS
under federal law (26 USC 223 (c)(2)(C)).
SUMMARY OF PROVISIONS:
Section 1 adds new subsection (n) to section 3216 of the insurance law.
Section 2 adds new subsection (v) to section 3221 of the insurance law.
Section 3 adds new subsection (ww) to section 4303 of the insurance law.
Section 4 provides an effective date.
JUSTIFICATION:
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.
PRIOR LEGISLATIVE HISTORY:
New Bill. While certain bills have included a protective exception for
HSAs with respect to state benefit mandates covering individual
diseases, treatments or services, this bill would create a new provision
embedded in the Insurance Law regarding HSA-qualified plans for all such
state benefit and/or cost-sharing mandates.
FISCAL IMPLICATIONS FOR STATE:
None.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
5367--A
2025-2026 Regular Sessions
IN ASSEMBLY
February 13, 2025
___________
Introduced by M. of A. WEPRIN -- read once and referred to the Committee
on Insurance -- committee discharged, bill amended, ordered reprinted
as amended and recommitted to said committee
AN ACT to amend the insurance law, in relation to high deductible health
plans and health savings accounts
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 3216 of the insurance law is amended by adding a
2 new subsection (n) to read as follows:
3 (n) With respect to high deductible health plans offered in conjunc-
4 tion with a health reimbursement account or a health savings account, if
5 application of any cost sharing requirements would result in health
6 savings account ineligibility under section two hundred twenty-three of
7 the internal revenue code, such cost sharing requirement shall apply for
8 health savings account-qualified high deductible health plans with
9 respect to the deductible of such a plan, only after the enrollee has
10 satisfied the minimum deductible under section two hundred twenty-three
11 of the internal revenue code, except with respect to items or services
12 that are considered preventive care pursuant to subparagraph (C) of
13 paragraph two of subsection c of section two hundred twenty-three of the
14 internal revenue code, in which case the cost-sharing requirements of
15 this section shall apply regardless of whether the minimum deductible
16 required under section two hundred twenty-three of the internal revenue
17 code has been satisfied.
18 § 2. Section 3221 of the insurance law is amended by adding a new
19 subsection (v) to read as follows:
20 (v) With respect to high deductible health plans offered in conjunc-
21 tion with a health reimbursement account or a health savings account, if
22 application of any cost sharing requirements would result in health
23 savings account ineligibility under section two hundred twenty-three of
24 the internal revenue code, such cost sharing requirement shall apply for
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07833-04-5
A. 5367--A 2
1 health savings account-qualified high deductible health plans with
2 respect to the deductible of such a plan, only after the enrollee has
3 satisfied the minimum deductible under section two hundred twenty-three
4 of the internal revenue code, except with respect to items or services
5 that are considered preventive care pursuant to subparagraph (C) of
6 paragraph two of subsection c of section two hundred twenty-three of the
7 internal revenue code, in which case the cost-sharing requirements of
8 this section shall apply regardless of whether the minimum deductible
9 required under section two hundred twenty-three of the internal revenue
10 code has been satisfied.
11 § 3. Section 4303 of the insurance law is amended by adding a new
12 subsection (ww) to read as follows:
13 (ww) With respect to high deductible health plans offered in conjunc-
14 tion with a health reimbursement account or a health savings account, if
15 application of any cost sharing requirements would result in health
16 savings account ineligibility under section two hundred twenty-three of
17 the internal revenue code, such cost sharing requirement shall apply for
18 health savings account-qualified high deductible health plans with
19 respect to the deductible of such a plan, only after the enrollee has
20 satisfied the minimum deductible under section two hundred twenty-three
21 of the internal revenue code, except with respect to items or services
22 that are considered preventive care pursuant to subparagraph (C) of
23 paragraph two of subsection c of section two hundred twenty-three of the
24 internal revenue code, in which case the cost-sharing requirements of
25 this section shall apply regardless of whether the minimum deductible
26 required under section two hundred twenty-three of the internal revenue
27 code has been satisfied.
28 § 4. This act shall take effect immediately.
