B.__Make or continue to make contributions to the employee's medical coverage; or

C.__Contribute to both the employee's individual medical savings account and the employee's medical coverage.

6.__Limit.__In each taxable year, there is a $20,000 limit on the total deposits that may be made to an account by or on behalf of an account holder.

7.__Death of account holder.__Upon the death of an account holder, the account administrator shall distribute the principal and accumulated interest of the individual medical savings account to the estate of the account holder.

8.__Tax consequences. Any amount deposited into an account established under this chapter may be subtracted from taxable income of the account holder during the same tax year up to the limit established in subsection 6.__Funds withdrawn pursuant to subsection 4 must be considered income to the account holder for the purpose of computing adjusted gross income.

SUMMARY

This bill allows residents of the State to establish individual medical savings accounts for payment of eligible medical expenses, including the payment of health insurance premiums and deductibles. Contributions to, interest earned on and qualified withdrawals from individual medical savings accounts are exempt from Maine state income tax up to $20,000 per tax year.