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Health Savings Accounts and Bankruptcy

When someone has a high-deductible health insurance plan they look to offset that deductible cost by placing money in a qualified health savings account (HSA) . The money placed in that particular account grows tax free and can be used on eligible healthcare expenses as determined by the Internal Revenue Service (IRS). However, there are tax penalties if those expenses are not qualified medical expenses. A person can make contributions to a HSA account only if that person is covered under a qualified high-deductible health insurance plan.

An HSA is not excluded from the bankruptcy estate, thus it must be disclosed in the bankruptcy petition, including the amount in the account at the time of the filing of the bankruptcy case. In essence, an HSA with funds set aside in that account is an asset simply stated. In the purest sense, an HSA is a trust account whereby, the person who is the beneficiary of that account, can use those funds with no such restrictions. The primary advantage of an HSA is the tax benefits, if those funds are used for qualified medical expenses. Moreover, Congress has never made any such amendments to the bankruptcy code to exclude an HSA from property of the bankruptcy estate. Thus, the bankruptcy code makes no such specific provision for exclusion of an HSA, nor any specific federal exemption for such an asset, other than what is available under the so called 'wildcard exemption'.

The purpose of this blog is not to provide legal advice, but to merely give you an understanding that if you intend on pursuing a bankruptcy, there are many complexities and nuances and that some issues, if not identified prior to a bankruptcy filing can create major problems on the debtor who files for bankruptcy relief. I always find it best advice to hire an attorney who specializes in bankruptcy law, as there are too many pitfalls that await an individual who is not fully prepared to understand all the potential issues.

If you are struggling with too much debt, being garnished by a debt collector, medical debt, behind on mortgage payment, behind on vehicle payments etc., then please CALL US TODAY at 989-891-9780 for your free initial bankruptcy consultation. It is always good due diligence on your part to know all your options at your disposal to deal with this financial distress you find yourself in.

I have over 18 years of experience filing successful chapter 7 and chapter 13 cases, and would love to help you! I am so concerned about my clients that I have a 7-day availability to meet with them. Call me at (989)891-9780, even on weekends and if it’s late at night leave me a message, we will return your call/message. Call and schedule your FREE initial bankruptcy consultation, You can also schedule your free bankruptcy consultation on our website at

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