A Health Savings Account is a bank account set up by individuals that allows them to save money for medical expenses (including high deductibles).  They were created in 2003, and allow people to make tax deductible contributions to the HSA and then spend the money on certain health related expenses.  They have become popular since their creation a decade ago and many people have a significant amount of money in the accounts.  When people face financial problems and have to file for Bankruptcy, an important question is whether the money saved in a health savings account is exempted.  Exemption laws vary from state to state, depending on whether states use federal exemptions or their own exemptions.  Georgia has opted out of federal exemptions and use their own.  In a recent case in Georgia, the Court held that HSAs were not exempt under Georgia law so, unfortunately, if significant funds are in the account the Trustee may be able to take the funds for the estate.   Lawmakers in other states, including Florida, Mississippi, Oregon, Tennessee, Texas, and Virginia, have amended their laws to expressly exempt heath savings accounts and it is certainly possible Georgia will do so.  However, as of now, it appears that the accounts are not exempt unless the individual has wild card exemptions available.  If you have an HSA with significant funds and are exploring Bankruptcy, it is very important to see a good Bankruptcy lawyer as soon as you can so that you can properly plan your exemptions and review other important factors for your potential case.  In Georgia, you can contact us to set up a meeting or phone consultation.

For a more detailed discussion and analysis of the recent case in the Middle District of Georgia, see this post on the Georgia Bankruptcy Blog.