Health Savings Acct. Not Exempt in Georgia Bankruptcy

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By Daniel Gill

Health Savings Accounts are not exempt from being included in bankruptcy estates, the U.S. Court of Appeals for the Eleventh Circuit held per curiam Jan 27 ( Mooney v. Webster (In re Mooney) , 2017 BL 24780, 11th Cir., No. 15-11229, 1/27/17 ).

The court based its opinion on a ruling by the Supreme Court of Georgia, to which the circuit previously certified the question interpreting Georgia’s exemption statutes regarding health savings accounts, or HSA’s.

In 2013 Denise E. Mooney filed a Chapter 7 case in Georgia. In Chapter 7 bankruptcy, a debtor’s nonexempt assets are liquidated by a trustee, and the proceeds are distributed to creditors. Subject to certain exceptions, the debtor is awarded a discharge, effectively wiping out dischargeable debts (that is, those debts not subject to an exception).

In her filing, Mooney sought to claim as exempt from her bankruptcy estate the money she had in her HSA. Since state law governs bankruptcy exemptions in Georgia, she relied on two provisions: one provided for an exemption of any “disability, illness, or unemployment benefit,” and the other exempts any “payment under a pension, annuity, or similar plan or contract on account of illness [or] disability. . . ,” the court explained.

The circuit court certified the question of whether HSA’s are exempted by either of these statutes to the Supreme Court of Georgia, “which answered both questions in the negative,” the court said.

Accordingly, Mooney’s HSA could be liquidated and administered by the Chapter 7 trustee in her case.

The appellate panel consisted of Circuit Judges Frank M. Hull and Jill A. Pryor, and Judge Anne C. Conway of the U.S. District Court for the Middle District of Florida, sitting by designation.

Mooney was represented by Stone & Baxter, LLP, Macon, Ga. Joy R. Webster, Chapter 7 trustee, was represented by Robert M. Matson, Akin Webster & Matson, PC, Macon, Ga.

To contact the reporter on this story: Daniel Gill in Washington at

To contact the editor responsible for this story: Jay Horowitz at

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