(1) Notwithstanding subsection (3), (4), (5) or (6) of this section, an eligible individual may withdraw money from his or her health savings account for any purpose other than a purpose described in Section 83-62-7.
(2) Subject to subsection (3) of this section, if the eligible individual withdraws money for any purpose other than a purpose described in Section 83-62-7 at any other time, all of the following apply:
(a) The amount of the withdrawal is considered taxable gross income of the account holder under Section 27-7-15 in the tax year of the withdrawal.
(b) Interest earned on the account during the tax year in which a withdrawal under this subsection is made is considered taxable gross income of the account holder under Section 27-7-15.
(3) The amount of disbursement of any assets of a health savings account pursuant to a filing for protection under Title 11 of the United States Code, 11 USCS 101 et seq., by an eligible individual or person for whose benefit the account was established is not considered a withdrawal for purposes of this section. The amount of a disbursement is not considered taxable gross income of the account holder under Section 27-7-15 and subsection (2) of this section does not apply.
(4) The transfer of an eligible individual’s interest in a health savings account to an eligible individual’s spouse or former spouse under a divorce or separation instrument shall not be considered a taxable transfer made by such eligible individual, and such interest shall, after such transfer, be treated as a health savings account with respect to which such spouse is the eligible individual.
(5) Upon the death of the eligible individual, the trustee or custodian shall distribute the principal and accumulated interest of the health savings account to the estate of the deceased.
(6) If an employee becomes employed with a different employer that participates in a health savings account program, the employee may transfer his or her health savings account to that new employer’s trustee or custodian or to an individually purchased account program.
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