Medical Care Savings Account Act of 2000 2005 Thresholds

The Medical Care Savings Account Act of 2000, created by P.A. 91-845, is nearly identical to its predecessor the Medical Care Savings Account Act (created by P.A. 88-648 and repealed on January 1, 2000). The employer purchases a "higher deductible" health plan for the employee and his or her dependents. The minimum higher deductible for 1994 was $1,000. The maximum higher deductible for 1994 was $3,000. The Department of Revenue is required, by P.A. 91-845, to adjust the minimum and maximum higher deductible amounts for 2000 (and annually thereafter) to reflect increases in the consumer price index.

The employer is to contribute all or part of the premium differential realized by purchasing the higher deductible health insurance into a medical care savings account for the benefit of the employee. Employer contributions to each medical care savings account are limited to an annual maximum amount. For two taxpayers filing a joint return (with each having a medical care savings account but neither covered by the other's health coverage), the maximum contribution for 1994 was $6,000. In all other cases, the maximum contribution was $3,000 for 1994. The Department of Revenue is required, by P.A. 91-845, to adjust the maximum contributions for 2000 (and annually thereafter) to reflect increases in the consumer price index.

The consumer price index (CPI), annual average for all urban consumers, was 188.9 for calendar year 2004 and 184.0 for calendar year 2003. The CPI increased 2.7% in 2004 over 2003. The 2004 thresholds should be increased 2.7% for 2005. Hence, for 2005, the minimum higher deductible is $1,309; the maximum higher deductible is $3,924; the maximum contribution for two taxpayers filing a joint return is $7,848 and the maximum contribution for all others is $3,924.

The following table summarizes the various thresholds for calendar years 1994 through 2005:

Year	Min. Higher Deductible	Max. Higher Deductible	Max. Contrib. For Two	Max. Contrib. All Others
1994	$1,000	$3,000	$6,000	$3,000
1995	$1,026	$3,078	$6,156	$3,078
1996	$1,055	$3,164	$6,328	$3,164
1997	$1,086	$3,256	$6,512	$3,256
1998	$1,111	$3,331	$6,662	$3,331
1999	$1,129	$3,384	$6,768	$3,384
2000	$1,154	$3,458	$6,917	$3,458
2001	$1,193	$3,576	$7,152	$3,576
2002	$1,226	$3,676	$7,352	$3,676
2003	$1,246	$3,735	$7,470	$3,735
2004	$1,275	$3,821	$7,642	$3,821
2005	$1,309	$3,924	$7,848	$3,924