B. Who, pursuant to this Part, has a Maine individual income tax liability for the taxable year.; or

Sec. 10. 36 MRSA §5220, sub-§1, ¶D is enacted to read:

D.__Who is subject to the penalty imposed by section 5204- C.

Sec. 11. 36 MRSA c. 914 is enacted to read:

CHAPTER 914

INDIVIDUAL MEDICAL SAVINGS ACCOUNTS

§6601.__Individual medical savings accounts

1.__Definitions.__As used in this chapter, unless the context otherwise indicates, the following terms have the same meaning as in Title 24-A, chapter 33-A:__"account administrator," "account holder," "eligible medical expenses" and "individual medical savings account."

2.__Deposits; deduction.__An amount deposited into an individual medical savings account in accordance with Title 24-A, section 2763, subsection 4 may be subtracted from taxable income of the account holder during the same tax year.__ Funds withdrawn pursuant to subsection 3 must be considered income for the purpose of computing adjusted gross income.

3.__Withdrawals.__If an account holder withdraws funds from an individual medical savings account for any purpose other than for the payment of eligible medical expenses, the withdrawal is subject to income tax.__The account administrator shall withhold the amount of income tax payable on any withdrawal under this subsection.

4.__Contingent repeal.__This chapter is repealed upon the repeal of federal legislation authorizing individual medical savings accounts, 26 United States Code, Section 220.

SUMMARY

The bill provides enabling legislation for health insurance carriers to offer medical savings accounts in conjunction with health insurance for policyholders in the individual health insurance market. Medical savings accounts must conform to the requirements for the accounts under federal law. Individuals