SWB C.S.H.B. 760 75(R)    BILL ANALYSIS


WAYS & MEANS
C.S.H.B. 760
By: Shields
4-2-97
Committee Report (Substituted)



BACKGROUND 

A medical savings account (MSA) is an account that is established by an
employer for the benefit of the employees.  It is funded with the
difference in premiums between a high deductible health care policy and a
low deductible policy.  The account accumulates over time to fund
preventative care and future health care expenses.  Current law provides
no tax benefit for employers to establish this type of an account. 

PURPOSE

The bill would provide a franchise tax credit to certain employers that
establish and contribute to medical savings accounts. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.Amends Chapter 171, Tax Code, by adding Subchapter N.  
TAX CREDIT FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNT.

Sec. 171.701.  DEFINITION.  Defines medical savings account as having the
same meaning assigned by 26 U.S.C.A. Sec. 220(d)(1). 

Sec. 171.702.  CREDIT.  Provides that eligible corporations are entitled
to a tax credit. 

Sec. 171.703.  CREDIT FOR CONTRIBUTIONS TO MEDICAL SAVINGS ACCOUNT.
Defines criteria for an eligible corporation: 

1.  The corporation must not have offered a health benefit plan to its
employees on or after January 1, 1997. 

2.  The corporation must have made a contribution to a MSA during the
reporting period.   

   3.  The corporation must have employed 50 or fewer employees during the
reporting period. 
  
Also provides that the amount of the credit is equal to 50 percent of the
total amount of the employer's contributions to MSAs for employees. 

Sec. 171.704.  APPLICATION FOR CREDIT.  States that the corporation must
adopt a form and apply for the credit. 


 Sec. 171.705.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.  Provides that the
credit can only apply for taxes due in the same reporting period, and that
the credit cannot exceed the amount of taxes due.  Also provides for
credit carry forward. 


Sec. 171.706.  ASSIGNMENT PROHIBITED.  Prohibits assigning the tax credit
to another entity, with an exception for the sale or acquisition of the
company. 

SECTION 2.This Act applies to reports due on or after January 1, 2000.

SECTION 3.Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 760 differs from H.B. 760 in three aspects:

1)  C.S.H.B. 760 limits eligible corporations to those that have not
offered a health benefit plan to their employees on or after January 1,
1997. 

2)  C.S.H.B. 760 also limits the franchise tax credit to 50 percent of the
total amount of the employer's contributions to MSAs for employees.  H.B.
760 allowed franchise tax credits for the full amount of contributions to
MSAs. 

3)  C.S.H.B. 760 changes the date of reports due for which the Act applies
to January 1, 2000.  The effective date for H.B. 760 was January 1, 1998.