Friday, August 25, 2017

Health savings accounts now exempt in Georgia bankruptcy

Health savings accounts and medical savings accounts are now specifically exempt for individuals filing for bankruptcy protection in Georgia bankruptcy cases (i.e., when Georgia bankruptcy exemptions apply). Senate Bill 87 was passed by the General Assembly and signed by Governor Deal this year for a July 1 effective date. There is no dollar limit on the amount of this exemption, though it is tied to accounts which are defined by the Internal Revenue Code or a law called the Georgia Affordable HSA Eligible High Deductible Health Plan Act.

Formerly, the funds in an HSA or MSA could only be exempted potentially up to $10,000 as a "wild card" exemption, which is a "catchall" exemption for any type of property which did not have its own special category of exemption (such as jewelry, motor vehicles, or retirement accounts). Since the use of the medical funds are restricted and used for a debtor's support needs, this is a very good policy development in Georgia which was long overdue.