Washington--A Florida congressman has introduced legislation creating a catastrophic savings account based on the health savings account model to help victims in hurricane-prone areas put money aside to prepare for the financial impact of a major catastrophe.

Under the plan as introduced by Rep. Tom Feeney, R-Fla., homeowners would be able to save up to $15,000 tax-free in the accounts. Also under the plan, so-called catastrophe savings accounts would be created. These accounts would empower homeowners to put money aside to prepare for the financial impact of a major catastrophe.

Structured in the same manner as health savings accounts, a catastrophe tax-free savings account could be opened to cover current and future catastrophe-related expenses. Earnings from the money deposited would be tax-free, and any unused balances would roll over from year-to-year.

Homeowners with lower deductibles, (up to $1000) could contribute and hold up to $2000 in their CSA, under Mr. Feeney's bill. For homeowners with deductibles higher than $1000, the cap would be twice the amount of the individual's deductible (up to $15,000).

The money could be withdrawn to cover qualified disaster expenses tax-free. Qualified expenses would include deductibles, uninsured losses, flood damage and structural upgrades for future storms.

Upon retirement, the money could be removed from the account penalty-free.

Mr. Feeney said his bill has bipartisan support. "As someone from a state that is often threatened or has been hit by a natural disaster, I understand the need to prepare and save for future disasters," Mr. Feeney said. "Florida has experienced back-to-back record-setting hurricane seasons. The disaster in New Orleans has shown us that the federal government is not the most reliable or efficient resource for disaster relief."

Special Reports /

Cat Savings Account Leg. Proposed

Related Stories

Recommended For You