September 12, 2013

Beware: The Creditor and the HSA Investment Account

A recent case [Leitch v. Christians (In re Leitch), No. 13-6009 (8th Cir. B.A.P. Jul. 16, 2013)] determined that bankruptcy does not afford the health savings account (HSA) investment account protection from creditors.  The rationale of the Court is that the HSA investment fund is fully accessible by the accountholder, albeit with additional tax consequences if money is withdrawn for other than qualifying medical expenses.  In the Court’s view, this availability is sufficient to warrant exposing the account balance to the claims of creditors.  Some states may provide a bit of protection; but the general rule is that the account is available to creditors.


The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.