People who have a qualified high deductible health insurance plan and who deposit money into a Health Savings Account (HSA) are able to deduct their contribution from their Federal Income Taxes (see IRS publication 969 Health Savings Accounts and Other Tax-Favored Health Plans.) Unfortunately, HSA contributions are currently subject to California income taxes. That may change if SB 173 becomes law. Introduced by San Luis Obispo Republican Senator Abel Maldonado, SB 173 would allow Californian's with HSA's to deduct their contributions from their California State Income Taxes. California is only one of 11 states which currently do not allow HSA contributions to be deducted from state income taxes. To open an HSA an individual must have a qualified California medical insurance plan with a minimum deductible of $1,000. A single person can contribute 100 percent of the deductible amount, commensurate with the number of months in the year he is covered by the qualified health insurance policy in California. The maximum amount that an individual can contribute to a California HSA account, assuming he had a qualified medical insurance plan for 12 months during 2005 and the health plan's deductible were this amount, is $2,600. A family with a qualified California High Deductible Health Plan (HDHP) would have a minimum calendar year medical insurance deductible of $2,000 and a maximum health insurance deductible of $5,150. If passed into law, SB 173 would become effective January 1, 2006. Making HSAs tax deductible from California income taxes would increase the value of these accounts and reduce the cost of health insurance for those Californian's with Health Savings Accounts. |
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California Health Insurance |
Group Health Insurance in California |
Health Savings Accounts | |
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