FISCAL NOTE



FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to allow a federal adjusted gross income deduction for the amount spent on a high deductible health plan purchased in conjunction with a health savings account. According to our interpretation, any revenue consequences associated with tax deductions for high-deductible, non-group health insurance costs should be minimal, particularly if the availability of such a deduction effectively encourages some employers to drop the traditional employer-provided health insurance coverage. Employer provided health insurance costs are deductible for federal and state income tax purposes. This estimate assumes that the proposed modification is limited to the cost of the insurance policy and does not apply to out-of-pocket health care expenses. There would be no additional administrative costs associated with passage of this bill.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2010
Increase/Decrease
(use"-")
2011
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


The stated purpose of this bill is to allow a federal adjusted gross income deduction for the amount spent on a high deductible health plan purchased in conjunction with a health savings account. According to our interpretation, any revenue consequences associated with tax deductions for high-deductible, non-group health insurance costs should be minimal, particularly if the availability of such a deduction effectively encourages some employers to drop the traditional employer-provided health insurance coverage. Employer provided health insurance costs are deductible for federal and state income tax purposes. This estimate assumes that the proposed modification is limited to the cost of the insurance policy and does not apply to out-of-pocket health care expenses. There would be no additional administrative costs associated with passage of this bill.



Memorandum


The stated purpose of this bill is to allow a federal adjusted gross income deduction for the amount spent on a high deductible health plan purchased in conjunction with a health savings account. The bill text and its purpose refer to a “deduction”. However, WV. Code 11-21-13 provides that “no deduction shall be allowed for taxable years beginning on or after [December 31, 1986]”. While the bill will effectively allow a modification reducing federal adjusted gross income, the language of the new section should be cleaned up to refer to such modification as opposed to a deduction. It is unclear as to whether “the amount spent” relates to the amount of premiums paid for the plan, the amount of medical expenses not covered by the plan, the amount deductible under the plan or any combination of those items.



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov