My operations department is having a disagreement with our legal cousel and want me to post this question.

When we receive a garnishment or a state levy, are we allowed to take money from that customer's HSA? The lawyers say take everything, but can't cite any law or regulation that allows that. The Ops department says that we shouldn't take it because of all the tax issues it could create. Can anyone provide a cite in state law that allows or doesn't allow us to take funds from an HSA to satisfy a garnishment or state levy? Any help would be appreciated.

I thought I gave you a court case from Idaho that indicated that HSA's are not protected? This forum is not the place to get an answer since this is an internal dispute and neither party has the facts to back it up. Call your legal counsel and get a ruling. Personally, I don't see where they are potected, but there could be more recent case law that I am not aware of.