Section 6-3-2-18 - Employee medical care savings accounts; exemption limited to deposits before January 1, 2016(a) As used in this section, "eligible medical expense" has the meaning set forth in IC 6-8-11-3.(b) As used in this section, "medical care savings account" has the meaning set forth in IC 6-8-11-6.(c) This subsection applies only to money deposited by an employer in a medical care savings account before January 1, 2016. Except as provided in subsection (g), the amount of money deposited by an employer in a medical care savings account established for an employee under IC 6-8-11 is exempt from taxation under IC 6-3-1 through IC 6-3-7 as income of the employee in the taxable year in which the money is deposited in the account.(d) Except as provided in subsection (g), the amount of money that is:(1) withdrawn from a medical care savings account established for an employee under IC 6-8-11; and(2) either: (A) used by the administrator of the account for a purpose set forth in IC 6-8-11-13; or(B) used under IC 6-8-11-13 to reimburse an employee for eligible medical expenses that the employee has incurred and paid for medical care for the employee or a dependent of the employee; is exempt from taxation under IC 6-3-1 through IC 6-3-7 as income of the employee.
(e) Except as provided in IC 6-8-11-11 and IC 6-8-11-11.5, in each taxable year, the amount of money that is: (1) withdrawn by an employee from a medical care savings account established under IC 6-8-11; and(2) used for a purpose other than the purposes set forth in IC 6-8-11-13; is income to the employee that is subject to taxation under IC 6-3-1 through IC 6-3-7.
(f) If an employee withdraws money from the employee's medical care savings account under the circumstances set forth in IC 6-8-11-17(c), the interest earned on the balance in the account during the full tax year in which the withdrawal is made is subject to taxation under IC 6-3-1 through IC 6-3-7 as income of the employee.(g) A taxpayer that excluded or deducted an amount deposited into a medical care savings account from adjusted gross income under:(1) section 106 of the Internal Revenue Code;(2) section 220 of the Internal Revenue Code; or(3) any other section of the Internal Revenue Code; is not eligible for an additional exemption from adjusted gross income under this section.
Amended by P.L. 250-2015, SEC. 23, eff. 1/1/2016.As added by P.L. 92-1995, SEC.1 and P.L. 93-1995, SEC.1. Amended by P.L. 60-1997, SEC.3.