S T A T E   O F   N E W   Y O R K
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                                  9302--A
 
                           I N  A S S E M B L Y
 
                             February 23, 2024
                                ___________
 
 Introduced by M. of A. JENSEN -- read once and referred to the Committee
   on  Health -- committee discharged, bill amended, ordered reprinted as
   amended and recommitted to said committee
 
 AN ACT to amend the tax law and the public health law,  in  relation  to
   providing expanded enrollment through New York state of health through
   tax  returns  (Part A); to amend the public health law, in relation to
   allowing for enrollment through the New York state of  health  at  any
   time for first-time enrollees (Part B); to amend the insurance law and
   the legislative law, in relation to creating the New York health bene-
   fit  and  cost  commission; and to repeal section 213 of the insurance
   law relating thereto (Part C); and to amend the public health law  and
   the  tax law, in relation to establishing New York health care savings
   accounts to expand and incentivize purchasing private health insurance
   (Part D)
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Short  title. This act shall be known and may be cited as
 the "real choice health act".
   § 2. Legislative intent. The Legislature recognizes the importance  of
 ensuring  a robust and responsive healthcare system that meets the needs
 and preferences of its residents. Although significant improvements have
 been made to reduce the number of  uninsured  New  Yorkers  and  control
 costs,  there is still substantial work to be done. However, despite the
 need to ensure that more New Yorkers are insured and  can  afford  their
 healthcare  costs,  preserving individual choices in healthcare is para-
 mount. Although some argue that a single-payer system in  the  State  of
 New York would improve access and reduce costs, doing so would eliminate
 important  healthcare  choices  for many New Yorkers by creating blanket
 State coverage, require significant tax  increases  on  individuals  and
 businesses  in New York, which would further perpetuate our outmigration
 problem, create potential domestic migration of individuals with  costly
 adverse  health  issues, eliminate jobs by dismantling the health insur-
 ance industry and lead to voluntary unemployment without  the  need  for
 employer-based  coverage  and require continued and expanded reliance on
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD13809-03-4
 A. 9302--A                          2
 
 the Federal government for funding and waivers. The single-payer  system
 would  place the responsibility of healthcare for all New Yorkers solely
 in the hands of the State, exposing healthcare needs to even more  poli-
 tical pressures. New York State government has proven that it has diffi-
 culty  administrating  large programs effectively and without mismanage-
 ment, with both the existing Medicaid program and the roll-out of  legal
 recreational cannabis serving as important examples.
   Moving  forward,  New  York should continue to improve on the positive
 changes in the current system that have been made  thus  far.  Doing  so
 would continue to enable a competitive healthcare system that encourages
 innovation  and  drives continuous improvements in care, ensuring access
 to cutting-edge treatments and  technologies  for  all  residents.  This
 system  would ensure that the opinions and preferences of the population
 would continue to shape the healthcare system.
   Therefore, this proposal focuses on preserving individual  choices  by
 improving access to health insurance enrollment through expanded enroll-
 ment  period and enhanced outreach, creating a State process for analyz-
 ing costs before significant health  insurance  changes  are  made,  and
 incentivizing  individuals  to purchase health insurance and reduce out-
 of-pocket costs by creating a New York health care savings account.
   § 3. This act enacts into law major components of legislation  provid-
 ing  expanded  enrollment  through  New York state of health through tax
 returns, allowing for enrollment through the New York state of health at
 any time for first-time enrollees, expanding New York  state  of  health
 navigator program, creating the New York health benefit and cost commis-
 sion,  and  establishing New York health care savings accounts to expand
 and incentivize purchasing private health insurance. Each  component  is
 wholly  contained  within  a  Part  identified as Parts A through D. The
 effective date for each particular provision contained within such  Part
 is  set  forth  in  the  last section of such Part. Any provision in any
 section contained within a Part, including the  effective  date  of  the
 Part,  which  makes  reference  to a section "of this act," when used in
 connection with that particular component, shall be deemed to  mean  and
 refer to the corresponding section of the Part in which it is found.
 
                                  PART A
 
   Section  1. The tax law is amended by adding a new section 664 to read
 as follows:
   § 664. HEALTH MARKETPLACE ELIGIBILITY. THE COMMISSIONER SHALL  REQUIRE
 THAT ALL INCOME TAX RETURNS ALLOW THE TAXPAYER TO REQUEST, BY CHECKING A
 BOX,  TO BE INCLUDED ON THE RETURN, THAT THE DEPARTMENT OF HEALTH REVIEW
 RELEVANT AND NECESSARY TAXPAYER DATA IN ORDER TO  PROVIDE  THE  TAXPAYER
 WITH  INFORMATION  RELATED  TO  THEIR ELIGIBILITY FOR HEALTH MARKETPLACE
 PROGRAMS, PLANS, AND AVAILABLE INCENTIVES. ADJACENT TO SUCH  BOX,  THERE
 SHALL  BE  A  STATEMENT  IN  PROMINENT TYPE, "IF YOU CHECK THIS BOX, YOU
 AFFIRM THAT YOU ARE UNINSURED, DO NOT HAVE  EMPLOYER-SPONSORED  COVERAGE
 AVAILABLE,  AND  ARE  (1) REQUESTING THAT THE STATE DEPARTMENT OF HEALTH
 REVIEW NECESSARY PORTIONS OF YOUR TAX  FILING,  (2)  USE  SUCH  DATA  AS
 NECESSARY  TO  MAKE  DETERMINATIONS  AS  TO YOUR ELIGIBILITY FOR MEDICAL
 ASSISTANCE (MEDICAID), THE BASIC HEALTH PLAN (ESSENTIAL PLAN), OR  PLANS
 THROUGH THE NY STATE OF HEALTH AND AVAILABLE INCENTIVES, AND (3) CONTACT
 YOU TO PROVIDE SUCH ELIGIBILITY INFORMATION."
   §  2.  Section 206 of the public health law is amended by adding a new
 subdivision 32 to read as follows:
 A. 9302--A                          3
 
   32. THE COMMISSIONER SHALL CREATE A PROGRAM WITHIN THE  DEPARTMENT  TO
 ASSIST  UNINSURED  INDIVIDUALS  WITHOUT EMPLOYER-SPONSORED COVERAGE WITH
 ENROLLING IN HEALTH INSURANCE COVERAGE THROUGH STATE INCOME TAX FILINGS.
 THIS PROGRAM SHALL:
   (A)  REVIEW  RELEVANT AND NECESSARY TAXPAYER DATA AUTHORIZED UNDER THE
 TAX LAW WITHIN THIRTY DAYS OF RECEIVING SUCH AUTHORIZATION;
   (B) CONTACT INDIVIDUALS WHO OPT TO HAVE  THEIR  TAX  FILINGS  REVIEWED
 WITHIN THIRTY DAYS OF SUCH REVIEW;
   (C)  DETERMINE  WHETHER  AN INDIVIDUAL IS ELIGIBLE FOR MEDICAL ASSIST-
 ANCE, CHILD HEALTH INSURANCE PLAN, OR BASIC HEALTH PLAN COVERAGE;
   (D) UPON DETERMINING AN INDIVIDUAL IS ELIGIBLE FOR MEDICAL ASSISTANCE,
 CHILD HEALTH INSURANCE PLAN, OR BASIC HEALTH PLAN COVERAGE,  OFFER  SUCH
 INDIVIDUALS AN INVITATION TO SELECT A PLAN, PROVIDED THAT THE INDIVIDUAL
 DOES NOT HAVE EMPLOYER-SPONSORED COVERAGE AVAILABLE; AND
   (E)  IN  THE  CASE  OF  INDIVIDUALS INELIGIBLE FOR MEDICAL ASSISTANCE,
 CHILD HEALTH INSURANCE PLAN, OR BASIC HEALTH PLAN  COVERAGE,  PROVIDE  A
 REFERRAL  TO  A NAVIGATOR CERTIFIED UNDER SUBDIVISION FIFTEEN OF SECTION
 TWO HUNDRED SIXTY-EIGHT-C OF THIS CHAPTER.
   § 3. This act shall take effect January 1, 2025.
 
                                  PART B
 
   Section 1. Subdivisions 5 and 15 of section 268-c of the public health
 law, as added by section 2 of part T of chapter 57 of the laws of  2019,
 are amended to read as follows:
   5. Maintain enrollment periods in the best interest of qualified indi-
 viduals  consistent  with  federal  and  state  law.  SUCH PERIODS SHALL
 INCLUDE, BUT MAY NOT BE LIMITED TO:
   (A) ALLOWING SPECIAL ENROLLMENT AT ANY TIME  FOR  CURRENTLY  UNINSURED
 INDIVIDUALS  ENROLLING  IN THE MARKETPLACE FOR THE FIRST TIME WHO DO NOT
 HAVE EMPLOYER-SPONSORED COVERAGE AVAILABLE; AND
   (B) ALLOWING SPECIAL ENROLLMENT FOR UNINSURED INDIVIDUALS WHO  DO  NOT
 HAVE  EMPLOYER-SPONSORED COVERAGE AVAILABLE ENROLLING THROUGH THE ESTAB-
 LISHED INCOME TAX RETURN PROCESS.
   15. Operate a program under which the  Marketplace  awards  grants  to
 entities  to  serve  as navigators in accordance with applicable federal
 law and regulations adopted thereunder, and/or a program under which the
 Marketplace awards grants to entities to provide community based enroll-
 ment assistance in accordance with requirements developed by the Market-
 place; and/or a program under which the Marketplace certifies  New  York
 state  licensed  producers to provide assistance to eligible individuals
 and/or small employers pursuant to federal  or  state  law.  SUBJECT  TO
 APPROPRIATION,  ADDITIONAL GRANTS SHALL BE AWARDED ON AN ANNUAL BASIS TO
 PROVIDERS IN THE CITY OF NEW YORK AND COUNTIES WHERE THE RATE  OF  UNIN-
 SURED  INDIVIDUALS  BELOW  FOUR  HUNDRED  PERCENT OF THE FEDERAL POVERTY
 LEVEL IS ABOVE THE STATEWIDE AVERAGE.
   § 2. This act shall take effect January 1, 2025.

                                  PART C
 
   Section 1. The insurance law is amended by adding a new section 3221-a
 to read as follows:
   § 3221-A. HEALTH BENEFIT AND COST COMMISSION. (A) FOR THE PURPOSES  OF
 THIS  SECTION, "MANDATED HEALTH BENEFIT" SHALL MEAN ANY REQUIREMENT THAT
 INDIVIDUAL, GROUP OR BLANKET ACCIDENT AND HEALTH INSURANCE  POLICIES  OR
 CONTRACTS ISSUED BY HOSPITAL OR HEALTH SERVICE CORPORATIONS INCLUDE:
 A. 9302--A                          4
 
   (1)  COVERAGE  FOR  SPECIFIC HEALTH SERVICES, TREATMENT, TESTS, DRUGS,
 SUPPLIES, OR EQUIPMENT TO DIAGNOSE OR  TREAT  A  PARTICULAR  DISEASE  OR
 CONDITION; AND
   (2)  COVERAGE  FOR  SERVICES  OF  SPECIFIC  PROVIDERS  OF  HEALTH CARE
 SERVICES.
   (B) THERE IS HEREBY CREATED A COMMISSION WITHIN THE DEPARTMENT, TO  BE
 KNOWN AS THE "NEW YORK HEALTH BENEFIT AND COST COMMISSION" CONSISTING OF
 THIRTEEN  MEMBERS  TO  BE APPOINTED AS FOLLOWS: THREE TO BE APPOINTED BY
 THE GOVERNOR, THREE TO BE APPOINTED BY THE TEMPORARY  PRESIDENT  OF  THE
 SENATE,  THREE  TO  BE APPOINTED BY THE SPEAKER OF THE ASSEMBLY, AND ONE
 EACH TO BE APPOINTED BY THE MINORITY LEADER OF THE SENATE AND THE ASSEM-
 BLY. THE SUPERINTENDENT AND THE COMMISSIONER OF HEALTH, OR THEIR  DESIG-
 NATED  REPRESENTATIVES,  SHALL  ALSO SERVE AS MEMBERS OF THE COMMISSION.
 THE MEMBERS SHALL ELECT A PERSON TO SERVE AS CHAIR.
   (C) EACH MEMBER SHALL SERVE FOR A TERM OF FOUR YEARS. VACANCIES  SHALL
 BE APPOINTED IN THE SAME MANNER AS ORIGINAL APPOINTMENTS. THE MEMBERS OF
 THE  COMMISSION  SHALL  RECEIVE  NO  COMPENSATION FOR THEIR SERVICES BUT
 SHALL BE ALLOWED ACTUAL AND NECESSARY EXPENSES INCURRED IN THE  PERFORM-
 ANCE  OF THEIR DUTIES. THE COMMISSION MAY REQUEST AND SHALL RECEIVE FROM
 ANY DEPARTMENT, BOARD, BUREAU,  COMMISSION,  OFFICE,  AGENCY,  OR  OTHER
 INSTRUMENTALITY OF THE STATE SUCH FACILITIES, ASSISTANCE, AND DATA AS IT
 DEEMS  NECESSARY OR DESIRABLE FOR THE PROPER EXECUTION OF ITS POWERS AND
 DUTIES. THE COMMISSION MAY SEEK THE ASSISTANCE AND ADVICE OF ANY PERSON,
 ORGANIZATION, OR ENTITY AS MAY BE RELEVANT OR NECESSARY AND MAY HIRE  OR
 CONTRACT  WITH  ANY SUCH PERSON, ORGANIZATION, OR ENTITY. THE COMMISSION
 SHALL HAVE THE POWER TO HOLD PUBLIC HEARINGS AND  SOLICIT  TESTIMONY  ON
 ANY MATTER IT DEEMS RELEVANT TO CARRYING OUT ITS MISSION.
   §  2.  The  legislative law is amended by adding a new section 52-a to
 read as follows:
   § 52-A. REQUIREMENTS WITH RESPECT TO BILLS AFFECTING  MANDATED  HEALTH
 BENEFITS.  1.  FOR  PURPOSES OF THIS SECTION, THE TERMS "MANDATED HEALTH
 BENEFITS" SHALL HAVE THE SAME MEANINGS THAT THEY HAVE IN  SECTION  THREE
 THOUSAND TWO HUNDRED TWENTY-ONE-A OF THE INSURANCE LAW.
   2.  IN  ADDITION TO ANY OTHER FISCAL NOTE REQUIRED, A BILL THAT ENACTS
 OR AMENDS ANY LAW IN RELATION TO  MANDATING  HEALTH  BENEFITS  SHALL  BE
 ACCOMPANIED BY AN IMPACT STATEMENT CONSISTING OF A FISCAL NOTE SEPARATE-
 LY STATING THE ESTIMATED COST OF THE HEALTH BENEFITS MANDATE IN THE BILL
 FOR  THE  FIRST  YEAR  IT IS TO BE IN EFFECT AND FOR THE NEXT SUCCEEDING
 YEAR, AS WELL AS A STATEMENT OF THE PUBLIC PURPOSE TO BE SERVED BY  SUCH
 MANDATE.
   3. THE COMMISSION SHALL CONDUCT A REVIEW AND PUBLIC COMMENT PERIOD AND
 ISSUE  A  REPORT  RELATING  TO  LEGISLATION  THAT WOULD ENACT A MANDATED
 HEALTH BENEFIT. SUCH ISSUANCE SHALL:
   (A) CONSIDER AND SUMMARIZE ALL  PUBLIC  COMMENT  AND  ALL  SCIENTIFIC,
 MEDICAL,  AND ACTUARIAL DATA AND INFORMATION PROVIDED OR OBTAINED RELAT-
 ING TO THE PROPOSED MANDATED HEALTH BENEFIT;
   (B) REPORT ON PUBLIC AND PATIENT HEALTH ISSUES, INCLUDING:
   (I) THE EXTENT TO WHICH THE PROPOSED MANDATED HEALTH BENEFIT IS AVAIL-
 ABLE AND UTILIZED BY THE STATE'S POPULATION  AND  THE  LEVEL  OF  PUBLIC
 DEMAND FOR THE BENEFIT;
   (II)  THE  EXTENT  TO  WHICH  THE  PROPOSED MANDATED HEALTH BENEFIT IS
 ALREADY A COVERED HEALTH BENEFIT;
   (III) IF COVERAGE IS NOT GENERALLY AVAILABLE, THE EXTENT TO WHICH  THE
 LACK  OF  COVERAGE  RESULTS  IN PERSONS BEING UNABLE TO OBTAIN NECESSARY
 HEALTH CARE AND RESULTS IN FINANCIAL HARDSHIP  FOR  THOSE  NEEDING  SUCH
 CARE;
 A. 9302--A                          5
 
   (IV)  PROJECTED  UTILIZATION  RATES  AND  ACCESS TO SERVICE THAT WOULD
 RESULT FROM THE PROPOSED MANDATED HEALTH BENEFIT;
   (V)  WHETHER  THE  PROPOSED  MANDATED HEALTH BENEFIT IS A MEDICAL OR A
 BROADER SOCIAL NEED AND WHETHER IT IS CONSISTENT WITH THE ROLE OF HEALTH
 INSURANCE AND MANAGED HEALTH CARE; AND
   (VI) THE EXTENT TO WHICH  THE  PROPOSED  MANDATED  HEALTH  BENEFIT  IS
 GENERALLY  RECOGNIZED  BY  THE  MEDICAL COMMUNITY AS BEING EFFECTIVE AND
 EFFICACIOUS, INCLUDING APPROPRIATE REVIEW BY SCIENTIFIC AND MEDICAL PEER
 REVIEW LITERATURE; AND
   (C) REPORT ON ACCESS TO COVERAGE AND ECONOMIC ISSUES, INCLUDING:
   (I) THE IMPACT ON PREMIUMS, RATES, AND COSTS OF HEALTH COVERAGE IN ALL
 AFFECTED MARKETS;
   (II) THE IMPACT THAT THE PROPOSED MANDATED HEALTH BENEFIT MAY HAVE  ON
 THE AVAILABILITY OF OTHER BENEFITS;
   (III) THE IMPACT THAT THE PROPOSED MANDATED HEALTH BENEFIT MAY HAVE ON
 THE  AVAILABILITY  OF  HEALTH  COVERAGE  IN EACH AFFECTED MARKET AND THE
 IMPACT ON THE NUMBER OF PERSONS COVERED THROUGH SELF-INSURED PLANS; AND
   (IV) REPORT ON ANY OTHER MATTER, QUESTION, OR CONCERN  RELATING  TO  A
 MANDATED  HEALTH BENEFIT AS MAY BE DETERMINED RELEVANT BY THE COMMISSION
 OR BY THE PERSON HAVING ISSUED THE REQUEST.
   4. THE COMMISSION SHALL ALLOW A THIRTY-DAY PUBLIC COMMENT  PERIOD  AND
 ISSUE  A  REPORT  TO THE GOVERNOR AND THE LEGISLATURE WITHIN NINETY DAYS
 AFTER RECEIPT OF A WRITTEN REQUEST. THE COMMISSION MAY EXTEND ITS REVIEW
 PERIOD AND REPORTING TIME UPON THE CONSENT OF THE PERSON  HAVING  ISSUED
 THE REQUEST.
   5. THE COMMISSION SHALL REVIEW AND REPORT ON UTILIZATION RATES, PUBLIC
 AND  PATIENT HEALTH EFFECTS, AND IMPACT ON PREMIUMS AND ACCESS TO HEALTH
 CARE AND HEALTH COVERAGE OF ALL MANDATED HEALTH BENEFITS EXISTING ON THE
 EFFECTIVE DATE OF THIS SECTION.
   § 3. Section 213 of the insurance law is REPEALED.
   § 4. This act shall take effect immediately.
 
                                  PART D
 
   Section 1. Short title. This act shall be known and may  be  cited  as
 the "New York health care savings act".
   §  2. The public health law is amended by adding a new article 48-A to
 read as follows:
                               ARTICLE 48-A
                NEW YORK STATE HEALTH CARE SAVINGS PROGRAM
 SECTION 4850. PROGRAM ESTABLISHED.
         4851. PURPOSES.
         4852. DEFINITIONS.
         4853. FUNCTIONS OF THE COMPTROLLER AND THE CORPORATION.
         4854. POWERS OF THE COMPTROLLER.
         4855. PROGRAM REQUIREMENTS; NEW YORK STATE HEALTH  CARE  SAVINGS
                 ACCOUNT.
         4856. PROGRAM  LIMITATIONS;  NEW  YORK STATE HEALTH CARE SAVINGS
                 ACCOUNT.
   § 4850. PROGRAM ESTABLISHED. THERE IS HEREBY ESTABLISHED THE NEW  YORK
 STATE  HEALTH  CARE  SAVINGS PROGRAM AND SUCH PROGRAM SHALL BE KNOWN AND
 MAY BE CITED AS THE "NEW YORK STATE HEALTH CARE SAVINGS PROGRAM".
   § 4851. PURPOSES. THE PURPOSES OF  THE  NEW  YORK  STATE  HEALTH  CARE
 SAVINGS  PROGRAM  SHALL  BE  TO  AUTHORIZE THE ESTABLISHMENT OF NEW YORK
 STATE HEALTH CARE SAVINGS ACCOUNTS AND TO  PROVIDE  GUIDELINES  FOR  THE
 MAINTENANCE OF SUCH ACCOUNTS.
 A. 9302--A                          6
 
   §  4852.  DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE, THE FOLLOWING
 TERMS SHALL HAVE THE FOLLOWING MEANINGS:
   1.  "ACCOUNT"  OR "NEW YORK HEALTH CARE SAVINGS ACCOUNT" SHALL MEAN AN
 INDIVIDUAL OR FAMILY SAVINGS ACCOUNT ESTABLISHED IN ACCORDANCE WITH  THE
 PROVISIONS OF THIS ARTICLE.
   2.  "ACCOUNT  OWNER" SHALL MEAN A PERSON WHO ENTERS INTO A HEALTH CARE
 SAVINGS AGREEMENT PURSUANT TO THE PROVISIONS OF THIS ARTICLE,  INCLUDING
 A  PERSON  WHO  ENTERS INTO SUCH AN AGREEMENT AS A FIDUCIARY OR AGENT ON
 BEHALF OF A TRUST, ESTATE, PARTNERSHIP, ASSOCIATION, COMPANY  OR  CORPO-
 RATION.  THE ACCOUNT OWNER MAY ALSO BE THE DESIGNATED BENEFICIARY OF THE
 ACCOUNT.
   3. "DESIGNATED BENEFICIARY" SHALL MEAN, WITH RESPECT TO AN ACCOUNT  OR
 ACCOUNTS,  THE INDIVIDUAL DESIGNATED AS THE INDIVIDUAL WHOSE HEALTH CARE
 EXPENSES ARE EXPECTED TO BE PAID FROM THE ACCOUNT OR ACCOUNTS.
   4. "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION  AUTHORIZED  TO
 DO BUSINESS IN THE STATE OF NEW YORK AND:
   (A)  WHICH  IS AN AUTHORIZED FIDUCIARY TO ACT AS A TRUSTEE PURSUANT TO
 THE PROVISIONS OF AN  ACT  OF  CONGRESS  ENTITLED  "EMPLOYEE  RETIREMENT
 INCOME SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY BE AMENDED FROM TIME
 TO TIME, OR AN INSURANCE COMPANY;
   (B)  (I)  IS  LICENSED  OR  CHARTERED  BY  THE DEPARTMENT OF FINANCIAL
 SERVICES;
   (II) IS CHARTERED BY AN AGENCY OF THE FEDERAL GOVERNMENT;
   (III) IS SUBJECT TO THE JURISDICTION AND REGULATION OF THE  SECURITIES
 AND EXCHANGE COMMISSION OF THE FEDERAL GOVERNMENT; OR
   (IV)  IS ANY OTHER ENTITY OTHERWISE AUTHORIZED TO ACT IN THIS STATE AS
 A TRUSTEE PURSUANT TO THE PROVISIONS OF  AN  ACT  OF  CONGRESS  ENTITLED
 "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY
 BE AMENDED FROM TIME TO TIME.
   5.  "MEMBER  OF  THE  FAMILY" SHALL MEAN A FAMILY MEMBER AS DEFINED IN
 SECTION FIVE HUNDRED TWENTY-NINE OF THE INTERNAL REVENUE CODE  OF  1986,
 AS AMENDED.
   6. "PROGRAM" SHALL MEAN THE NEW YORK STATE HEALTH CARE SAVINGS PROGRAM
 ESTABLISHED PURSUANT TO THIS ARTICLE.
   7. "QUALIFIED HEALTH CARE EXPENSES" SHALL MEAN ANY HEALTH CARE-RELATED
 EXPENSE  INCLUDING  BUT  NOT  LIMITED TO: PREMIUMS, DEDUCTIBLES, COPAYS,
 LONG-TERM CARE, AND ANY OUT-OF-POCKET EXPENSE INCURRED BY THE DESIGNATED
 BENEFICIARY OR HIS OR  HER  MEMBER  OF  THE  FAMILY  ELIGIBLE  FOR  SUCH
 EXPENSE.
   8.  "QUALIFIED  WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN ACCOUNT TO
 PAY THE QUALIFIED HEALTH CARE EXPENSES OF THE DESIGNATED BENEFICIARY  OF
 THE ACCOUNT.
   9.  "NONQUALIFIED WITHDRAWAL" SHALL MEAN A WITHDRAWAL FROM AN ACCOUNT,
 BUT SHALL NOT MEAN:
   (A) A QUALIFIED WITHDRAWAL; OR
   (B) A WITHDRAWAL MADE AS THE RESULT OF THE DEATH OR DISABILITY OF  THE
 DESIGNATED BENEFICIARY OF AN ACCOUNT.
   10.  "DEPARTMENT"  SHALL MEAN THE DEPARTMENT OF HEALTH OF THE STATE OF
 NEW YORK.
   11. "COMPTROLLER" SHALL MEAN THE COMPTROLLER OF THE STATE OF NEW YORK.
   12. "MANAGEMENT CONTRACT" SHALL MEAN  THE  CONTRACT  EXECUTED  BY  THE
 COMPTROLLER AND A FINANCIAL ORGANIZATION SELECTED TO ACT AS A DEPOSITORY
 AND MANAGER OF THE PROGRAM.
   13.  "HEALTH  CARE  SAVINGS AGREEMENT" SHALL MEAN AN AGREEMENT BETWEEN
 THE COMPTROLLER OR A FINANCIAL ORGANIZATION AND THE ACCOUNT OWNER.
 A. 9302--A                          7
 
   14. "PROGRAM MANAGER" SHALL MEAN A FINANCIAL ORGANIZATION SELECTED  BY
 THE COMPTROLLER TO ACT AS A DEPOSITORY AND MANAGER OF THE PROGRAM.
   § 4853. FUNCTIONS OF THE COMPTROLLER AND THE CORPORATION. 1. THE COMP-
 TROLLER  AND  THE DEPARTMENT SHALL IMPLEMENT THE PROGRAM UNDER THE TERMS
 AND CONDITIONS ESTABLISHED BY THIS ARTICLE AND A  MEMORANDUM  OF  UNDER-
 STANDING  RELATING  TO  ANY  TERMS OR CONDITIONS NOT OTHERWISE EXPRESSLY
 PROVIDED FOR IN THIS ARTICLE.
   2. IN FURTHERANCE OF SUCH IMPLEMENTATION THE MEMORANDUM OF UNDERSTAND-
 ING SHALL ADDRESS THE AUTHORITY AND RESPONSIBILITY  OF  THE  COMPTROLLER
 AND THE DEPARTMENT TO:
   (A)  DEVELOP AND IMPLEMENT THE PROGRAM IN A MANNER CONSISTENT WITH THE
 PROVISIONS OF THIS ARTICLE THROUGH RULES AND REGULATIONS ESTABLISHED  IN
 ACCORDANCE WITH THE STATE ADMINISTRATIVE PROCEDURE ACT;
   (B) ENGAGE THE SERVICES OF CONSULTANTS ON A CONTRACT BASIS FOR RENDER-
 ING PROFESSIONAL AND TECHNICAL ASSISTANCE AND ADVICE;
   (C)  SEEK RULINGS AND OTHER GUIDANCE FROM THE UNITED STATES DEPARTMENT
 OF TREASURY AND THE INTERNAL REVENUE SERVICE RELATING TO THE PROGRAM;
   (D) SEEK FEDERAL WAIVERS IN ORDER FOR THE PARTICIPANTS IN THE  PROGRAM
 TO  OBTAIN  THE  FEDERAL  INCOME  TAX  BENEFITS OR TREATMENT PROVIDED BY
 SECTION TWO HUNDRED TWENTY-THREE OF THE INTERNAL REVENUE CODE  OF  1986,
 AS AMENDED, OR ANY SIMILAR SUCCESSOR LEGISLATION;
   (E) CHARGE, IMPOSE, AND COLLECT ADMINISTRATIVE FEES AND SERVICE CHARG-
 ES IN CONNECTION WITH ANY AGREEMENT, CONTRACT OR TRANSACTION RELATING TO
 THE PROGRAM;
   (F) DEVELOP MARKETING PLANS AND PROMOTION MATERIAL;
   (G)  ESTABLISH THE METHODS BY WHICH THE FUNDS HELD IN SUCH ACCOUNTS BE
 DISPERSED;
   (H) ESTABLISH THE METHOD BY WHICH FUNDS SHALL BE ALLOCATED TO PAY  FOR
 ADMINISTRATIVE COSTS; AND
   (I)  DO  ALL  THINGS NECESSARY AND PROPER TO CARRY OUT THE PURPOSES OF
 THIS ARTICLE.
   § 4854. POWERS OF THE COMPTROLLER. 1. THE  COMPTROLLER  MAY  IMPLEMENT
 THE  PROGRAM THROUGH USE OF FINANCIAL ORGANIZATIONS AS ACCOUNT DEPOSITO-
 RIES AND MANAGERS. UNDER THE PROGRAM, INDIVIDUALS MAY ESTABLISH ACCOUNTS
 DIRECTLY WITH AN ACCOUNT DEPOSITORY.
   2. THE COMPTROLLER MAY SOLICIT PROPOSALS FROM FINANCIAL  ORGANIZATIONS
 TO  ACT AS DEPOSITORIES AND MANAGERS OF THE PROGRAM. FINANCIAL ORGANIZA-
 TIONS SUBMITTING PROPOSALS  SHALL  DESCRIBE  THE  INVESTMENT  INSTRUMENT
 WHICH  WILL BE HELD IN ACCOUNTS. THE COMPTROLLER SHALL SELECT AS PROGRAM
 DEPOSITORIES AND MANAGERS THE FINANCIAL  ORGANIZATION,  FROM  AMONG  THE
 BIDDING  FINANCIAL ORGANIZATIONS THAT DEMONSTRATES THE MOST ADVANTAGEOUS
 COMBINATION, BOTH TO POTENTIAL PROGRAM PARTICIPANTS AND THIS  STATE,  OF
 THE FOLLOWING FACTORS:
   (A) FINANCIAL STABILITY AND INTEGRITY OF THE FINANCIAL ORGANIZATION;
   (B) THE SAFETY OF THE INVESTMENT INSTRUMENT BEING OFFERED;
   (C) THE ABILITY OF THE INVESTMENT INSTRUMENT TO TRACK INCREASING COSTS
 OF HEALTH CARE;
   (D) THE ABILITY OF THE FINANCIAL ORGANIZATION TO SATISFY RECORDKEEPING
 AND REPORTING REQUIREMENTS;
   (E)  THE  FINANCIAL  ORGANIZATION'S PLAN FOR PROMOTING THE PROGRAM AND
 THE INVESTMENT IT IS WILLING TO MAKE TO PROMOTE THE PROGRAM;
   (F) THE FEES, IF ANY, PROPOSED TO BE CHARGED TO  PERSONS  FOR  OPENING
 ACCOUNTS;
   (G)  THE  MINIMUM  INITIAL  DEPOSIT AND MINIMUM CONTRIBUTIONS THAT THE
 FINANCIAL ORGANIZATION WILL REQUIRE;
 A. 9302--A                          8
 
   (H) THE ABILITY OF FINANCIAL ORGANIZATIONS TO ACCEPT ELECTRONIC  WITH-
 DRAWALS, INCLUDING PAYROLL DEDUCTION PLANS; AND
   (I)  OTHER  BENEFITS  TO  THE  STATE  OR ITS RESIDENTS INCLUDED IN THE
 PROPOSAL, INCLUDING FEES PAYABLE TO THE STATE TO COVER EXPENSES OF OPER-
 ATION OF THE PROGRAM.
   3. THE COMPTROLLER MAY ENTER INTO A CONTRACT WITH A  FINANCIAL  ORGAN-
 IZATION.  SUCH FINANCIAL ORGANIZATION MANAGEMENT MAY PROVIDE ONE OR MORE
 TYPES OF INVESTMENT INSTRUMENT.
   4. THE COMPTROLLER MAY SELECT MORE THAN ONE FINANCIAL ORGANIZATION FOR
 THE PROGRAM.
   5. A MANAGEMENT CONTRACT SHALL INCLUDE, AT A MINIMUM, TERMS  REQUIRING
 THE FINANCIAL ORGANIZATION TO:
   (A)  TAKE  ANY  ACTION REQUIRED TO KEEP THE PROGRAM IN COMPLIANCE WITH
 REQUIREMENTS OF SECTION FOUR THOUSAND EIGHT HUNDRED FIFTY-FIVE  OF  THIS
 ARTICLE;
   (B)  KEEP  ADEQUATE  RECORDS OF EACH ACCOUNT, KEEP EACH ACCOUNT SEGRE-
 GATED FROM EACH OTHER ACCOUNT, AND  PROVIDE  THE  COMPTROLLER  WITH  THE
 INFORMATION NECESSARY TO PREPARE THE STATEMENTS REQUIRED BY SECTION FOUR
 THOUSAND EIGHT HUNDRED FIFTY-FIVE OF THIS ARTICLE;
   (C)  COMPILE AND TOTAL INFORMATION CONTAINED IN STATEMENTS REQUIRED TO
 BE PREPARED UNDER SECTION FOUR THOUSAND EIGHT HUNDRED FIFTY-FIVE OF THIS
 ARTICLE AND PROVIDE SUCH COMPILATIONS TO THE COMPTROLLER;
   (D) IF THERE IS MORE THAN ONE PROGRAM MANAGER, PROVIDE THE COMPTROLLER
 WITH SUCH INFORMATION NECESSARY TO  DETERMINE  COMPLIANCE  WITH  SECTION
 FOUR THOUSAND EIGHT HUNDRED FIFTY-FIVE OF THIS ARTICLE;
   (E) PROVIDE THE COMPTROLLER OR HIS OR HER DESIGNEE ACCESS TO THE BOOKS
 AND  RECORDS  OF  THE  PROGRAM MANAGER TO THE EXTENT NEEDED TO DETERMINE
 COMPLIANCE WITH THE CONTRACT;
   (F) HOLD ALL ACCOUNTS FOR THE BENEFIT OF THE ACCOUNT OWNER;
   (G) BE AUDITED AT  LEAST  ANNUALLY  BY  A  FIRM  OF  CERTIFIED  PUBLIC
 ACCOUNTANTS SELECTED BY THE PROGRAM MANAGER AND THAT THE RESULTS OF SUCH
 AUDIT BE PROVIDED TO THE COMPTROLLER;
   (H)  PROVIDE THE COMPTROLLER WITH COPIES OF ALL REGULATORY FILINGS AND
 REPORTS MADE BY IT DURING THE TERM OF THE MANAGEMENT CONTRACT  OR  WHILE
 IT  IS  HOLDING ANY ACCOUNTS, OTHER THAN CONFIDENTIAL FILINGS OR REPORTS
 THAT WILL NOT BECOME PART OF THE PROGRAM. THE PROGRAM MANAGER SHALL MAKE
 AVAILABLE FOR REVIEW BY THE COMPTROLLER  THE  RESULTS  OF  ANY  PERIODIC
 EXAMINATION  OF SUCH MANAGER BY ANY STATE OR FEDERAL BANKING, INSURANCE,
 OR SECURITIES COMMISSION, EXCEPT TO  THE  EXTENT  THAT  SUCH  REPORT  OR
 REPORTS  MAY  NOT BE DISCLOSED UNDER APPLICABLE LAW OR THE RULES OF SUCH
 COMMISSION; AND
   (I) ENSURE THAT ANY DESCRIPTION OF THE PROGRAM, WHETHER IN WRITING  OR
 THROUGH  THE  USE  OF  ANY  MEDIA, IS CONSISTENT WITH THE MARKETING PLAN
 DEVELOPED IN THE MEMORANDUM OF UNDERSTANDING PURSUANT TO THE  PROVISIONS
 OF SECTION FOUR THOUSAND EIGHT HUNDRED FIFTY-THREE OF THIS ARTICLE.
   6. THE COMPTROLLER MAY PROVIDE THAT AN AUDIT SHALL BE CONDUCTED OF THE
 OPERATIONS  AND FINANCIAL POSITION OF THE PROGRAM DEPOSITORY AND MANAGER
 AT ANY TIME IF THE COMPTROLLER HAS ANY REASON TO BE CONCERNED ABOUT  THE
 FINANCIAL  POSITION,  THE  RECORDKEEPING  PRACTICES,  OR  THE  STATUS OF
 ACCOUNTS OF SUCH PROGRAM DEPOSITORY AND MANAGER.
   7. DURING THE TERM OF ANY CONTRACT WITH A PROGRAM MANAGER,  THE  COMP-
 TROLLER SHALL CONDUCT AN EXAMINATION OF SUCH MANAGER AND ITS HANDLING OF
 ACCOUNTS.  SUCH  EXAMINATION  SHALL  BE CONDUCTED AT LEAST BIENNIALLY IF
 SUCH MANAGER IS NOT OTHERWISE SUBJECT TO  PERIODIC  EXAMINATION  BY  THE
 SUPERINTENDENT  OF  FINANCIAL  SERVICES,  THE  FEDERAL DEPOSIT INSURANCE
 CORPORATION OR OTHER SIMILAR ENTITY.
 A. 9302--A                          9
 
   8. (A) IF SELECTION OF A FINANCIAL ORGANIZATION AS A  PROGRAM  MANAGER
 OR DEPOSITORY IS NOT RENEWED, AFTER THE END OF ITS TERM:
   (I)  ACCOUNTS PREVIOUSLY ESTABLISHED AND HELD IN AN INVESTMENT INSTRU-
 MENT AT SUCH FINANCIAL ORGANIZATION MAY BE TERMINATED;
   (II) ADDITIONAL CONTRIBUTIONS MAY BE MADE TO SUCH ACCOUNTS;
   (III) NO NEW ACCOUNTS MAY BE PLACED WITH SUCH FINANCIAL  ORGANIZATION;
 AND
   (IV) EXISTING ACCOUNTS HELD BY SUCH DEPOSITORY SHALL REMAIN SUBJECT TO
 ALL OVERSIGHT AND REPORTING REQUIREMENTS ESTABLISHED BY THE COMPTROLLER.
   (B)  IF  THE  COMPTROLLER  TERMINATES  A  FINANCIAL  ORGANIZATION AS A
 PROGRAM MANAGER OR DEPOSITORY, HE OR SHE SHALL TAKE CUSTODY OF  ACCOUNTS
 HELD  BY SUCH FINANCIAL ORGANIZATION AND SHALL SEEK TO PROMPTLY TRANSFER
 SUCH ACCOUNTS TO ANOTHER FINANCIAL ORGANIZATION THAT IS  SELECTED  AS  A
 PROGRAM MANAGER OR DEPOSITORY AND INTO INVESTMENT INSTRUMENTS AS SIMILAR
 TO THE ORIGINAL INSTRUMENTS AS POSSIBLE.
   9.  THE  COMPTROLLER  MAY  ENTER  INTO SUCH CONTRACTS AS NECESSARY AND
 PROPER FOR THE IMPLEMENTATION OF THE PROGRAM.
   § 4855. PROGRAM REQUIREMENTS;  NEW  YORK  STATE  HEALTH  CARE  SAVINGS
 ACCOUNT.   1. NEW YORK HEALTH CARE SAVINGS ACCOUNTS ESTABLISHED PURSUANT
 TO THE PROVISIONS OF THIS ARTICLE SHALL BE GOVERNED BY THE PROVISIONS OF
 THIS SECTION.
   2. A NEW YORK HEALTH CARE SAVINGS ACCOUNT MAY BE OPENED BY ANY  PERSON
 WHO  DESIRES TO SAVE MONEY FOR THE PAYMENT OF THE QUALIFIED HEALTH CARE-
 RELATED EXPENSES OF THE DESIGNATED BENEFICIARY OR HIS OR HER  MEMBER  OF
 THE  FAMILY.  AN ACCOUNT OWNER MAY DESIGNATE ANOTHER PERSON AS SUCCESSOR
 OWNER OF THE ACCOUNT IN THE EVENT OF THE DEATH OF THE  ORIGINAL  ACCOUNT
 OWNER.  SUCH PERSON WHO OPENS AN ACCOUNT OR ANY SUCCESSOR OWNER SHALL BE
 CONSIDERED THE ACCOUNT OWNER AS DEFINED IN SECTION FOUR  THOUSAND  EIGHT
 HUNDRED FIFTY-TWO OF THIS ARTICLE.
   (A) AN APPLICATION FOR SUCH ACCOUNT SHALL BE IN THE FORM PRESCRIBED BY
 THE PROGRAM AND CONTAIN THE FOLLOWING:
   (I) THE NAME, ADDRESS AND SOCIAL SECURITY NUMBER OR EMPLOYER IDENTIFI-
 CATION NUMBER OF THE ACCOUNT OWNER;
   (II) THE DESIGNATION OF A DESIGNATED BENEFICIARY;
   (III)  THE NAME, ADDRESS, AND SOCIAL SECURITY NUMBER OF THE DESIGNATED
 BENEFICIARY; AND
   (IV) SUCH OTHER INFORMATION AS THE PROGRAM MAY REQUIRE.
   (B) THE COMPTROLLER AND THE DEPARTMENT MAY ESTABLISH A NOMINAL FEE FOR
 SUCH APPLICATION.
   3. ANY PERSON, INCLUDING THE ACCOUNT OWNER, MAY MAKE CONTRIBUTIONS  TO
 THE ACCOUNT AFTER THE ACCOUNT IS OPENED.
   4.  CONTRIBUTIONS  TO ACCOUNTS MAY BE MADE IN CASH OR MAY BE DEPOSITED
 BY A TAXPAYER WHO HAS ELECTED TO CONTRIBUTE ALL OR A PORTION OF A REFUND
 OF PERSONAL INCOME TAX TO AN ACCOUNT THAT  HAS  BEEN  ESTABLISHED  UNDER
 THIS ARTICLE.
   (A)  TAXPAYER  CONTRIBUTIONS  SHALL  BE  MADE BY DIRECT DEPOSIT TO THE
 DESIGNATED ACCOUNT. THE AMOUNT ELECTED TO BE CONTRIBUTED BY THE TAXPAYER
 MUST BE AT LEAST TWENTY-FIVE DOLLARS AND MAY BE APPLIED  AS  A  CONTRIB-
 UTION ONLY FOR THE TAX YEAR IN WHICH THE REFUND IS ISSUED.
   (B)  THE ELECTION SHALL BE MADE ON A FORM PRESCRIBED BY THE DEPARTMENT
 OF TAXATION AND FINANCE AND FILED WITH THE TAXPAYER'S TAX RETURN FOR THE
 TAX YEAR OR AT SUCH OTHER TIME AND IN SUCH OTHER MANNER AS  THE  DEPART-
 MENT MAY PRESCRIBE. THE DEPARTMENT SHALL PRESCRIBE THE MAXIMUM NUMBER OF
 ACCOUNTS  TO  WHICH  A TAXPAYER MAY ELECT TO CONTRIBUTE A PORTION OF THE
 REFUND.
 A. 9302--A                         10
 
   (C) THE ELECTION TO CONTRIBUTE ALL OR A PORTION OF A REFUND SHALL  NOT
 BE REVOCABLE.
   (D)  ALL OR A PORTION OF A REFUND MAY NOT BE CONTRIBUTED TO AN ACCOUNT
 THAT HAS BEEN ESTABLISHED UNDER  THIS  ARTICLE  IF  THE  AMOUNT  OF  THE
 TAXPAYER'S  ELECTED  REFUND  FOR  SUCH  TAX YEAR IS REDUCED BY ANY OTHER
 SECTIONS OF THE TAX LAW TO THE AMOUNT LESS THAN THE  MINIMUM  AMOUNT  OF
 CONTRIBUTION AUTHORIZED UNDER THIS SECTION.
   5.  AN  ACCOUNT  OWNER MAY WITHDRAW ALL OR PART OF THE BALANCE FROM AN
 ACCOUNT ON SIXTY DAYS NOTICE OR SUCH SHORTER PERIOD AS MAY BE AUTHORIZED
 UNDER RULES GOVERNING THE PROGRAM. SUCH RULES SHALL  INCLUDE  PROVISIONS
 THAT  WILL GENERALLY ENABLE THE DETERMINATION AS TO WHETHER A WITHDRAWAL
 IS A NONQUALIFIED WITHDRAWAL OR A QUALIFIED WITHDRAWAL.
   6. (A) AN ACCOUNT OWNER MAY CHANGE THE DESIGNATED  BENEFICIARY  OF  AN
 ACCOUNT  TO  AN  INDIVIDUAL  WHO  IS A MEMBER OF THE FAMILY OF THE PRIOR
 DESIGNATED BENEFICIARY IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY  THE
 MEMORANDUM  OF  UNDERSTANDING PURSUANT TO THE PROVISIONS OF SECTION FOUR
 THOUSAND EIGHT HUNDRED FIFTY-THREE OF THIS ARTICLE.
   (B) AN ACCOUNT OWNER MAY TRANSFER ALL OR A PORTION OF  AN  ACCOUNT  TO
 ANOTHER  NEW YORK HEALTH CARE SAVINGS ACCOUNT, THE SUBSEQUENT DESIGNATED
 BENEFICIARY OF WHICH IS A MEMBER OF THE FAMILY.
   (C) CHANGES IN  DESIGNATED  BENEFICIARIES  AND  TRANSFERS  UNDER  THIS
 SUBDIVISION  SHALL  NOT BE PERMITTED TO THE EXTENT THAT THEY WOULD CAUSE
 ALL ACCOUNTS FOR THE SAME BENEFICIARY TO EXCEED THE PERMITTED  AGGREGATE
 MAXIMUM ACCOUNT BALANCE.
   7.  THE  PROGRAM SHALL PROVIDE SEPARATE ACCOUNTING FOR EACH DESIGNATED
 BENEFICIARY.
   8. NO ACCOUNT OWNER OR DESIGNATED BENEFICIARY OF ANY ACCOUNT SHALL  BE
 PERMITTED TO DIRECT THE INVESTMENT OF ANY CONTRIBUTIONS TO AN ACCOUNT OR
 THE EARNINGS THEREON MORE THAN TWO TIMES IN ANY CALENDAR YEAR.
   9.  NEITHER  AN  ACCOUNT OWNER NOR A DESIGNATED BENEFICIARY MAY USE AN
 INTEREST IN AN ACCOUNT AS SECURITY FOR A LOAN. ANY PLEDGE OF AN INTEREST
 IN AN ACCOUNT SHALL BE OF NO FORCE AND EFFECT.
   10. THE COMPTROLLER SHALL PROMULGATE RULES OR REGULATIONS  TO  PREVENT
 CONTRIBUTIONS  ON  BEHALF  OF  A  DESIGNATED BENEFICIARY IN EXCESS OF AN
 AMOUNT THAT WOULD CAUSE THE AGGREGATE ACCOUNT BALANCE FOR  ALL  ACCOUNTS
 FOR  A  DESIGNATED  BENEFICIARY  TO EXCEED A MAXIMUM ACCOUNT BALANCE, AS
 ESTABLISHED FROM TIME TO TIME BY THE COMPTROLLER AND THE  DEPARTMENT  ON
 THE BASIS OF HEALTH CARE COSTS IN THE STATE, WITH ADEQUATE SAFEGUARDS TO
 PREVENT  MORE  CONTRIBUTIONS  THAN  NECESSARY  TO  PROVIDE FOR QUALIFIED
 HEALTH CARE EXPENSES OF THE BENEFICIARY OR HIS  OR  HER  MEMBER  OF  THE
 FAMILY.
   11. (A) IF THERE IS ANY DISTRIBUTION FROM AN ACCOUNT TO ANY INDIVIDUAL
 OR  FOR  THE  BENEFIT  OF  ANY  INDIVIDUAL  DURING A CALENDAR YEAR, SUCH
 DISTRIBUTION SHALL BE REPORTED TO THE INTERNAL REVENUE SERVICE  AND  THE
 ACCOUNT  OWNER,  THE  DESIGNATED  BENEFICIARY, OR THE DISTRIBUTEE TO THE
 EXTENT REQUIRED BY FEDERAL LAW OR REGULATION.
   (B) STATEMENTS SHALL BE PROVIDED TO EACH ACCOUNT OWNER AT  LEAST  ONCE
 EACH  YEAR WITHIN SIXTY DAYS AFTER THE END OF THE TWELVE MONTH PERIOD TO
 WHICH THEY RELATE. THE STATEMENT SHALL IDENTIFY THE  CONTRIBUTIONS  MADE
 DURING  A PRECEDING TWELVE MONTH PERIOD, THE TOTAL CONTRIBUTIONS MADE TO
 THE ACCOUNT THROUGH THE END OF THE PERIOD, THE VALUE OF THE  ACCOUNT  AT
 THE  END  OF  SUCH PERIOD, DISTRIBUTIONS MADE DURING SUCH PERIOD AND ANY
 OTHER INFORMATION THAT THE COMPTROLLER SHALL REQUIRE TO BE  REPORTED  TO
 THE ACCOUNT OWNER.
   (C)  STATEMENTS AND INFORMATION RELATING TO ACCOUNTS SHALL BE PREPARED
 AND FILED TO THE EXTENT REQUIRED BY FEDERAL AND STATE TAX LAW.
 A. 9302--A                         11
 
   12. (A) A  LOCAL  GOVERNMENT  OR  ORGANIZATION  DESCRIBED  IN  SECTION
 501(C)(3) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, MAY OPEN AND
 BECOME  THE  ACCOUNT  OWNER  OF AN ACCOUNT TO FUND QUALIFIED HEALTH CARE
 EXPENSES FOR PERSONS WHOSE IDENTITY WILL BE  DETERMINED  UPON  DISBURSE-
 MENT.
   (B)  IN  THE  CASE  OF ANY ACCOUNT OPENED PURSUANT TO PARAGRAPH (A) OF
 THIS SUBDIVISION THE REQUIREMENT SET FORTH IN SUBDIVISION  TWO  OF  THIS
 SECTION  THAT  A DESIGNATED BENEFICIARY BE DESIGNATED WHEN AN ACCOUNT IS
 OPENED SHALL NOT APPLY AND EACH INDIVIDUAL WHO RECEIVES AN  INTEREST  IN
 SUCH  ACCOUNT  AS  A QUALIFIED HEALTH CARE EXPENSE SHALL BE TREATED AS A
 DESIGNATED BENEFICIARY WITH RESPECT TO SUCH INTEREST.
   13. AN ANNUAL FEE MAY BE IMPOSED UPON THE ACCOUNT OWNER FOR THE  MAIN-
 TENANCE OF THE ACCOUNT.
   14. THE PROGRAM SHALL DISCLOSE THE FOLLOWING INFORMATION IN WRITING TO
 EACH  ACCOUNT  OWNER  AND PROSPECTIVE ACCOUNT OWNER OF A NEW YORK HEALTH
 CARE SAVINGS ACCOUNT:
   (A) THE TERMS AND CONDITIONS FOR PURCHASING A  NEW  YORK  HEALTH  CARE
 SAVINGS ACCOUNT;
   (B) ANY RESTRICTIONS ON THE SUBSTITUTION OF BENEFICIARIES;
   (C)  THE  PERSON  OR  ENTITY ENTITLED TO TERMINATE THE NEW YORK HEALTH
 CARE SAVINGS ACCOUNT;
   (D) THE PERIOD OF TIME DURING WHICH A BENEFICIARY MAY RECEIVE BENEFITS
 UNDER THE HEALTH CARE SAVINGS AGREEMENT;
   (E) THE TERMS AND CONDITIONS  UNDER  WHICH  MONEY  MAY  BE  WHOLLY  OR
 PARTIALLY WITHDRAWN FROM THE PROGRAM, INCLUDING, BUT NOT LIMITED TO, ANY
 REASONABLE CHARGES AND FEES THAT MAY BE IMPOSED FOR WITHDRAWAL;
   (F) THE PROBABLE TAX CONSEQUENCES ASSOCIATED WITH CONTRIBUTIONS TO AND
 DISTRIBUTIONS FROM ACCOUNTS; AND
   (G)  ALL  OTHER RIGHTS AND OBLIGATIONS PURSUANT TO HEALTH CARE SAVINGS
 AGREEMENTS, AND ANY  OTHER  TERMS,  CONDITIONS,  AND  PROVISIONS  DEEMED
 NECESSARY  AND APPROPRIATE BY THE TERMS OF THE MEMORANDUM OF UNDERSTAND-
 ING ENTERED INTO PURSUANT TO SECTION FOUR THOUSAND EIGHT HUNDRED  FIFTY-
 THREE OF THIS ARTICLE.
   15.  HEALTH  CARE SAVINGS AGREEMENTS SHALL BE SUBJECT TO SECTION FOUR-
 TEEN-C OF THE BANKING LAW AND THE "TRUTH-IN-SAVINGS" REGULATIONS PROMUL-
 GATED THEREUNDER.
   § 4856. PROGRAM  LIMITATIONS;  NEW  YORK  STATE  HEALTH  CARE  SAVINGS
 ACCOUNT.  1. NOTHING IN THIS ARTICLE SHALL BE CONSTRUED TO:
   (A)  GIVE ANY DESIGNATED BENEFICIARY ANY RIGHTS OR LEGAL INTEREST WITH
 RESPECT TO AN ACCOUNT UNLESS THE DESIGNATED BENEFICIARY IS  THE  ACCOUNT
 OWNER;
   (B)  CREATE STATE RESIDENCY FOR AN INDIVIDUAL MERELY BECAUSE THE INDI-
 VIDUAL IS A DESIGNATED BENEFICIARY OR HIS OR HER MEMBER OF  THE  FAMILY;
 OR
   (C)  GUARANTEE  THAT  AMOUNTS  SAVED  PURSUANT  TO THE PROGRAM WILL BE
 SUFFICIENT TO COVER THE QUALIFIED HEALTH CARE EXPENSES OF  A  DESIGNATED
 BENEFICIARY OR HIS OR HER MEMBER OF THE FAMILY.
   2.  (A) NOTHING IN THIS ARTICLE SHALL CREATE OR BE CONSTRUED TO CREATE
 ANY OBLIGATION OF THE COMPTROLLER, THE STATE, OR ANY AGENCY  OR  INSTRU-
 MENTALITY OF THE STATE TO GUARANTEE FOR THE BENEFIT OF ANY ACCOUNT OWNER
 OR DESIGNATED BENEFICIARY WITH RESPECT TO:
   (I) THE RATE OF INTEREST OR OTHER RETURN ON ANY ACCOUNT; AND
   (II) THE PAYMENT OF INTEREST OR OTHER RETURN ON ANY ACCOUNT.
   (B)  THE  COMPTROLLER  AND  THE DEPARTMENT BY RULE OR REGULATION SHALL
 PROVIDE THAT EVERY CONTRACT, APPLICATION, DEPOSIT SLIP, OR OTHER SIMILAR
 DOCUMENT THAT MAY BE USED  IN  CONNECTION  WITH  A  CONTRIBUTION  TO  AN
 A. 9302--A                         12
 
 ACCOUNT  CLEARLY  INDICATE  THAT THE ACCOUNT IS NOT INSURED BY THE STATE
 AND NEITHER THE PRINCIPAL DEPOSITED NOR THE INVESTMENT RETURN IS GUARAN-
 TEED BY THE STATE.
   § 3. Subsection (b) of section 612 of the tax law is amended by adding
 a new paragraph 44 to read as follows:
   (44)  (A)  EXCESS  DISTRIBUTIONS RECEIVED DURING THE TAXABLE YEAR BY A
 DISTRIBUTEE OF A NEW YORK HEALTH CARE SAVINGS ACCOUNT ESTABLISHED  UNDER
 THE  NEW  YORK  HEALTH  CARE  SAVINGS PROGRAM PROVIDED FOR UNDER ARTICLE
 FORTY-EIGHT-A OF THE PUBLIC  HEALTH  LAW,  TO  THE  EXTENT  SUCH  EXCESS
 DISTRIBUTIONS  ARE DEEMED ATTRIBUTABLE TO DEDUCTIBLE CONTRIBUTIONS UNDER
 PARAGRAPH FORTY-EIGHT OF SUBSECTION (C) OF THIS SECTION.
   (B) (I) THE TERM "EXCESS DISTRIBUTIONS" MEANS DISTRIBUTIONS WHICH  ARE
 NOT:
   (I)  QUALIFIED  WITHDRAWALS WITHIN THE MEANING OF SUBDIVISION EIGHT OF
 SECTION FOUR THOUSAND EIGHT HUNDRED FIFTY-TWO OF THE PUBLIC HEALTH LAW;
   (II) WITHDRAWALS MADE AS A RESULT OF THE DEATH OR  DISABILITY  OF  THE
 DESIGNATED BENEFICIARY WITHIN THE MEANING OF SUBDIVISION NINE OF SECTION
 FOUR THOUSAND EIGHT HUNDRED FIFTY-FOUR OF THE PUBLIC HEALTH LAW; OR
   (III) TRANSFERS DESCRIBED IN PARAGRAPH B OF SUBDIVISION SIX OF SECTION
 FOUR THOUSAND EIGHT HUNDRED FIFTY-FIVE OF THE PUBLIC HEALTH LAW.
   (II)  EXCESS  DISTRIBUTIONS SHALL BE DEEMED ATTRIBUTABLE TO DEDUCTIBLE
 CONTRIBUTIONS TO THE EXTENT THE AMOUNT OF ANY SUCH EXCESS  DISTRIBUTION,
 WHEN  ADDED  TO  ALL  PREVIOUS  EXCESS  DISTRIBUTIONS  FROM THE ACCOUNT,
 EXCEEDS THE AGGREGATE OF ALL NONDEDUCTIBLE CONTRIBUTIONS TO THE ACCOUNT.
   § 4. Subsection (c) of section 612 of the tax law is amended by adding
 two new paragraphs 48 and 49 to read as follows:
   (48) CONTRIBUTIONS MADE DURING THE TAXABLE YEAR BY AN ACCOUNT OWNER TO
 ONE OR MORE NEW YORK HEALTH CARE SAVINGS ACCOUNTS ESTABLISHED UNDER  THE
 NEW YORK HEALTH SAVINGS PROGRAM PROVIDED FOR UNDER ARTICLE FORTY-EIGHT-A
 OF  THE  PUBLIC HEALTH LAW, TO THE EXTENT NOT DEDUCTIBLE OR ELIGIBLE FOR
 CREDIT FOR FEDERAL INCOME TAX PURPOSES; PROVIDED, HOWEVER, THE EXCLUSION
 PROVIDED FOR IN THIS PARAGRAPH SHALL NOT EXCEED  FIVE  THOUSAND  DOLLARS
 FOR AN INDIVIDUAL OR HEAD OF HOUSEHOLD, AND FOR MARRIED COUPLES WHO FILE
 JOINT  TAX  RETURNS,  SHALL  NOT  EXCEED TEN THOUSAND DOLLARS; PROVIDED,
 FURTHER, THAT SUCH EXCLUSION SHALL BE  AVAILABLE  ONLY  TO  THE  ACCOUNT
 OWNER AND NOT TO ANY OTHER PERSON.
   (49)  DISTRIBUTIONS FROM A NEW YORK HEALTH CARE SAVINGS ACCOUNT ESTAB-
 LISHED UNDER THE NEW YORK STATE HEALTH CARE SAVINGS PROGRAM PROVIDED FOR
 UNDER ARTICLE FORTY-EIGHT-A OF THE PUBLIC  HEALTH  LAW,  TO  THE  EXTENT
 INCLUDIBLE IN GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES.
   § 5. This act shall take effect immediately and shall apply to taxable
 years  beginning  on  or  after the first of January next succeeding the
 date on which it shall have become a law.
   § 4. Severability clause. If any clause, sentence, paragraph, subdivi-
 sion, section or part of this act shall be adjudged by a court of compe-
 tent jurisdiction to be invalid, such judgment shall not affect,  impair
 or invalidate the remainder thereof, but shall be confined in its opera-
 tion  to  the  clause, sentence, paragraph, subdivision, section or part
 thereof directly involved in the  controversy  in  which  such  judgment
 shall  have been rendered. It is hereby declared to be the intent of the
 legislature that this act would have been enacted even if  such  invalid
 provisions had not been included herein.
   §  5.  This  act shall take effect immediately provided, however, that
 the applicable effective date of Parts A through D of this act shall  be
 as specifically set forth in the last section of such Parts.