Indiana Code - Taxation - Title 6, Section 6-3-2-18

Employee medical care savings accounts

Sec. 18. (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) 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(1) withdrawn from a medical care savings account established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, 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(1) withdrawn by an employee from a medical care savings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.

As added by P.L.92-1995, SEC.1 and P.L.93-1995, SEC.1. Amended
by P.L.60-1997, SEC.3.

Last modified: May 28, 2006