A.__For individual coverage, the health insurance policy must have an annual deductible of not less than $1,500 and not more than $2,550;

B. For family coverage, the health insurance policy must have an annual deductible of not less than $3,000 and not more than $4,500; and

C.__The annual out-of-pocket expenses, other than for premiums, for covered benefits may not exceed $3,000 for individual coverage or $5,500 for family coverage.

The annual deductible and annual limit on out-of-pocket expenses established in this subsection may be adjusted to conform to any cost-of-living adjustment made pursuant to 26 United States Code, Section 220.

2.__Account establishment.__A person may establish an individual medical savings account for taxable years beginning after December 31, 2003.__The account must be established as a trust under the laws of this State and must be placed with an account administrator.__At the time of establishment, the account administrator shall notify the account holder of potential federal income tax liability that may be associated with the account.

3.__Payment of eligible medical expenses.__The account administrator may use the funds in an account solely to pay eligible medical expenses of the account holder and members of the account holder's household that are not otherwise covered under the account holder's existing health insurance coverage. Funds held in an account may not be used to cover medical expenses of the account holder or members of the account holder's household that are otherwise covered, including, but not limited to, medical expenses covered pursuant to an automobile insurance policy, a workers' compensation insurance policy or a self-insured workers' compensation plan.__If the account holder submits appropriate documentation to the account administrator, the account administrator may reimburse the account holder from account funds for eligible medical expenses paid directly by the account holder during the taxable year.

4.__Employer contribution.__Upon agreement between an employer and an employee, an employer may contribute to the employee's individual medical savings account.