What Are Health Savings Accounts (HSAs)?
Health savings accounts (HSAs) have gained some popularity in recent years. The idea is that a person can deposit money in an account and receive tax benefits for doing so. The funds can then be used for the payment of medical expenses when and where needed. The idea seems to be a good one, but it is not without potential pitfalls.
When a bankruptcy case is filed, however, unused money sitting in a health savings account may not be exempt. A recent case from the Eighth Circuit Bankruptcy Appellate Panel (BAP) considered whether certain funds held in a “health savings account” (HSA) could be exempted in a bankruptcy case. The case was In Re Leitch, BAP No. 13-6009, from 2013.
Life can take unexpected twists and turns. We can have all sorts of problems. Some of them are medical problems. Some of them are accounting problems. Some of them are family or relationship problems.
And some of them are legal problems.
But we don’t often find many step-by-step guides on how to solve legal problems. Why is this? Well, there are a lot of reasons: not diagnosing the problem, being misled by the media, or not acting fast enough.
Can an IRA (individual retirement account) inherited from a relative be exempted by a debtor in bankruptcy? No, says a recent Kansas bankruptcy judge’s decision. The case was In Re Mosby (14-22981), decided in June 2015 by Judge Dale Somers. The facts were interesting.
The debtor filed a voluntary petition under Chapter 7 on December 29, 2014. The debtor claimed Jackson Life IRA valued at $15,015.50 as exempt under various Kansas statutes, including K.S.A. 60-2308, 60-2308(b), and 60-2313(a)(1).