HI SB857

Establishes the Medical Savings Account Act allowing employers to offer medical savings accounts to employees beginning after December 31, 2011.

Permits employers to contribute up to $3,000 annually per employee to medical savings accounts, with employees able to contribute the difference on a pretax basis.

Allows distributions from accounts only for eligible medical expenses of the account holder, spouse, or dependent child; cashing out a deceased holder's balance; or withdrawing prior year balances.

Exempts account moneys and interest from Hawaii state income tax when held in the account or withdrawn for eligible medical expenses, but subjects non-medical withdrawals to state income tax.

Account holders retain ownership and portability of accounts when changing employers; effective July 1, 2050 for taxable years beginning after December 31, 2011.