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Health Savings Account Deduction will be Signed into Law

Governor Walker will sign a bill into law today creating a state income tax deduction for contributions to Health Savings Accounts (HSAs). The bill was passed by the Legislature as part of the special session on economic recovery.

HSA contributions are already exempt from federal taxation. Wisconsin has been one of only a handful of states to still tax contributions.

HSAs are savings accounts owned by an individual that can be used for minor medical expenses, such as office visits and regular preventative care. A growing number of employers choose to make HSAs available to employees, and they are also popular among the self-employed. A high-deductible health insurance plan is used in conjunction with an HSA to cover major medical expenses.

HSAs allow individuals to take control of their medical decisions. Using the money from their HSA, an individual health care consumer can pay for the medical treatments they deem necessary, with the provider they prefer, without having a gatekeeper tell them what care they can or cannot receive and what doctor they must see. Unlike health insurance offered by an employer, HSAs are portable, remaining with an individual from job to job or if they leave the workforce.