Georgia Gov. Perdue Signs Bill Establishing Tax Exemptions For Employer-Provided High-Deductible Policies

Main Category: Health Insurance / Medical Insurance
Article Date: 12 May 2008 - 0:00 PST

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Georgia Gov. Sonny Perdue (R) on Wednesday signed into law two measures intended to make high-deductible health insurance plans more affordable and accessible, the Atlanta Journal-Constitution reports.

Under one bill (HB 977), insurers are exempt from taxes on premiums for high-deductible plans that include health savings accounts, for which they previously paid a tax of at least 2.5% (Gould Sheinin, Atlanta Journal-Constitution, 5/7). The bill also provides a $250 annual tax credit for small businesses that spend at least $250 to enroll workers in HSAs. The second bill (SB 383) states that arrangements that include only Health Reimbursement Accounts -- set up to allow for the use of pre-tax dollars for health-related expenses -- do not qualify as insurance if they are not packaged with individual insurance policies. The measure also requires that HSA plans comply with the any willing provider provision in current law, provided they pay any increases in premiums and cost (Atlanta Business Chronicle, 5/7).

According to former U.S. Speaker of the House Newt Gingrich (R-Ga.), founder of the Center for Health Transformation, as many as 500,000 state residents could gain health coverage through the bill. Gingrich said the bill is "ideal" and "moves us in the right direction."

The House bill is expected to provider insurers with $146 million annually in tax breaks. Employers are expected to save $64.8 million, and workers are expected to save $6.7 million, according to an independent analysis by the Georgia Budget and Policy Institute. Sen. Judson Hill (R), sponsor of the Senate bill, said insurers would pass savings along to consumers.

Critics of the bills say low-income state residents would still have trouble paying the lower premiums offered by high-deductible plans and would not have extra money to deposit into an HSA (Atlanta Journal-Constitution, 5/7).

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