A. 9384 2
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 THEIR 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.
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
A. 9384 3
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;
(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.
A. 9384 4
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 THEIR DESIGNEE ACCESS TO THE BOOKS AND
RECORDS OF THE PROGRAM MANAGER TO THE EXTENT NEEDED TO DETERMINE COMPLI-
ANCE 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.
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;
A. 9384 5
(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, THEY 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 THEIR 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 CONSID-
ERED 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.
(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
A. 9384 6
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 THEIR 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.
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.
A. 9384 7
(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 THEIR 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 THEIR 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
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:
A. 9384 8
(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.