California Assembly Passes Health SavingsBill For CUs
SACRAMENTO - (04/15/05) -- The state Assembly unanimouslyapproved legislation Monday that will allow state chartered creditunions to offer their members health savings accounts, which creditunion members could use to offset their health care expenses. Thebill, which seeks parity for state charters with federal creditunions, now moves to the Senate. Health savings accounts aretax-sheltered savings accounts similar to an Individual RetirementAccount, but earmarked for medical expenses. Taxpayers can deductcontributions to HSAs from their gross income, and the interest andinvestment earnings generated by the account are also not taxablewhile in the HSA. Amounts distributed are not taxable as long asthey are used to pay for qualified medical expenses. HSA funds canbe used to cover health insurance deductibles and co-payments formedical services, prescriptions, or products. HSA owners can alsouse their funds to purchase over-the-counter drugs and long-termcare insurance, and to pay health insurance premiums if they becomeunemployed.