Schwarzenegger Signs HSA Law, Creates Parity for State-Chartered CUs

SACRAMENTO, Calif. – California Gov. Arnold Schwarzenegger signed into law on July 21 legislation that will allow state-licensed credit unions to offer their members health savings accounts, effective January 1, 2006. The law creates parity between California’s state-chartered credit unions and federally-chartered credit unions, because the latter were already permitted to offer the accounts. “We congratulate all the credit union professionals and volunteers involved in the process of turning AB 434 into law,” said Matthew Davidson, Executive Vice President of the California Credit Union League. “League members worked hard to lobby for the bill, especially during this year’s Government Relations Rally. Their responses to several League `Calls to Action’ resulted in hundreds of letters in support to the state Legislature and the Governor’s office. It was a great team effort.” Upon reviewing new state law and applicable regulations, the League’s Research and Information Department will issue a new technical bulletin shortly. HSAs are congressionally authorized, tax-sheltered savings accounts similar to an Individual Retirement Account, but earmarked for medical expenses. Taxpayers can deduct contributions to HSAs from their gross income, and the interest and investment earnings generated by the account are also not taxable while in the HSA. These accounts can help employers to offer and consumers to purchase lower-premium health insurance plans that consequently carry higher deductibles.