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Dayton signs Health Savings Account exemption bill into law

On Behalf of | May 7, 2018 | Bankruptcy, Firm News

Governor Dayton just signed into law HF 2391 which provides an exemption for Health Savings Account. In bankruptcy, debtors can choose whether to protect their assets under state law or federal law. Federal law permits a miscellaneous exemption of up to $13,000, which usually covers most HSA’s. Sometimes debtors need to use state exemptions (usually due to substantial homestead equity) in which case they would potentially lose their HSA before this law goes into effect on August 1, 2018. This exemption also gives protection to debtors outside of bankruptcy.

Here is the text of the bill:

A bill for an act relating to financial institutions; regulating health savings and medical savings accounts; providing asset protection; amending Minnesota Statutes 2016, section 550.37, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. Minnesota Statutes 2016, section 550.37, is amended by adding a subdivision to read:

Subd. 26. Health savings accounts; medical savings accounts.

(a) All money held in a health savings account, as defined in the Internal Revenue Code of 1986, section 223(d), as amended, up to a present value of $25,000.

(b) All money held in a medical savings account, as defined in the Internal Revenue Code of 1986, section 220(d)(1), as amended, up to a present value of $25,000.

(c) The exemptions in paragraphs (a) and (b) do not apply pursuant to the division of marital assets under section 518.58, a surviving spouse benefit under section 518.581, and

a support order under section 518A.53.

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