I 
107TH CONGRESS 
2D SESSION 
H. R. 5415
To amend the Internal Revenue Code of 1986 to establish a pilot program 
to encourage the use of medical savings accounts by certain current 
and retired public employees of the State of Minnesota and political 
jurisdictions thereof. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 19, 2002
Mr. GUTKNECHT (for himself, Mr. KENNEDY of Minnesota, Mr. LUTHER, Ms. 
MCCOLLUM, Mr. PETERSON of Minnesota, Mr. RAMSTAD, and Mr. SABO) 
introduced the following bill; which was referred to the Committee on 
Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to establish 
a pilot program to encourage the use of medical savings 
accounts by certain current and retired public employees 
of the State of Minnesota and political jurisdictions 
thereof.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Minnesota MSA Em-
powerment Act of 2002’’.
SEC. 2. DEDUCTION FOR MINNESOTA PUBLIC EMPLOYEE 
MSA PILOT PROGRAM. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
additional itemized deductions) is amended by redesig-
nating section 223 as section 224 and by inserting after 
section 222 the following new section: 
‘‘SEC. 223. MINNESOTA PUBLIC EMPLOYEE MSAS. 
‘‘(a) IN GENERAL.—In the case of an eligible indi-
vidual, there shall be allowed as a deduction an amount 
equal to the amount contributed during the taxable year 
by such individual to the Minnesota public employee MSA 
of such individual. 
‘‘(b) LIMITATION.—The amount allowed as a deduc-
tion by subsection (a) for a taxable year shall not exceed 
$10,000. 
‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 
section, the term ‘eligible individual’ means an individual 
who—
‘‘(1) is in receipt of retirement benefits for the 
taxable year from the State of Minnesota or a polit-
ical subdivision thereof, or 
‘‘(2)(A) has attained age 45 as of the end of 
the taxable year, 
‘‘(B) is an employee of the State of Minnesota 
or a political subdivision thereof,
‘‘(C) as of the last day the of taxable year, is 
100 percent vested in the defined benefit plan pro-
vided by such State or political subdivision, and 
‘‘(D) made a contribution during the taxable 
year to such defined benefit plan. 
‘‘(d) MINNESOTA PUBLIC EMPLOYEE MSA.—
‘‘(1) IN GENERAL.—The term ‘Minnesota public 
employee MSA’ means an Archer MSA which is cre-
ated or organized exclusively for the purpose of pay-
ing the qualified medical expenses of the eligible in-
dividual and—
‘‘(A) which is designated as a Minnesota 
public employee MSA, 
‘‘(B) with respect to which no contribution 
may be made other than—
‘‘(i) a contribution made by the eligi-
ble individual or the employer of the eligi-
ble individual, and 
‘‘(ii) a trustee-to-trustee transfer re-
ferred to in paragraph (4), 
‘‘(C) the governing instrument of which 
provides that the trustee of such account may 
only be a Federally chartered credit union with 
multiple service locations throughout the Min-
neapolis-St. Paul metropolitan area that serves 
a substantial number of eligible individuals, and 
‘‘(D) the governing instrument of which 
provides that trustee-to-trustee transfers de-
scribed in section 220(f)(5) may be made to 
and from such account only from and to, re-
spectively, another Minnesota public employee 
MSA. 
‘‘(2) ARCHER
MSA; QUALIFIED
MEDICAL
EX-
PENSES.—For purposes of this section, the terms 
‘Archer MSA’ and ‘qualified medical expenses’ shall 
have the respective meanings given to such terms by 
section 220(d). 
‘‘(e) SPECIAL RULES.—In applying section 220 to a 
Minnesota public employee MSA—
‘‘(1) subsection (d)(1)(A)(ii) shall not apply, 
and 
‘‘(2) subsection (f)(3) shall be treated as includ-
ing a reference to this section. 
‘‘(f) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of a taxable 
year beginning after 2003, the dollar amount in sub-
section (b) shall be increased by an amount equal 
to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2002’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
‘‘(2) ROUNDING.—If any amount as adjusted 
under subparagraph (A) is not a multiple of $100, 
such amount shall be rounded to the next lowest 
multiple of $100. 
‘‘(g) REPORTS.—In the case of a Minnesota public 
employee MSA, the report under section 220(h)—
‘‘(1) shall include the fair market value of the 
assets in such Minnesota public employee MSA as of 
the close of each calendar year, and 
‘‘(2) shall be furnished to the account holder—
‘‘(A) not later than January 31 of the cal-
endar year following the calendar year to which 
such reports relate, and 
‘‘(B) in such manner as the Secretary pre-
scribes. 
‘‘(h) COORDINATION WITH LIMITATION ON NUMBER 
OF TAXPAYERS HAVING ARCHER MSAS.—Subsection (i) 
of section 220 shall not apply to an individual with respect 
to a Minnesota public employee MSA, and Minnesota pub-
lic employee MSAs shall not be taken into account in de-
termining whether the numerical limitations under section 
220(j) are exceeded.’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES.—Subsection (a) of section 62 is amend-
ed by inserting after paragraph (18) the following new 
item: 
‘‘(19) MINNESOTA PUBLIC EMPLOYEE MSAS.—
The deduction allowed by section 223.’’. 
(c) TAX
ON
EXCESS
CONTRIBUTIONS.—Section 
4973(d) of such Code (relating to excess contributions to 
Archer MSAs) is amended—
(1) in paragraph (1) by inserting ‘‘or 223’’ 
after ‘‘220’’, and 
(2) in paragraph (2) by inserting ‘‘or 223(b)’’ 
after ‘‘220(b)(1)’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for part VII of subchapter B of chapter 1 of such Code 
is amended by striking the last item and inserting the fol-
lowing new items:
‘‘Sec. 223. Minnesota public employee MSAs. 
‘‘Sec. 224. Cross reference.’’.
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002.
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