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HSA When a Spouse Dies

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  • HSA When a Spouse Dies

    Question: I've read that a HSA is in an individual's name. In our case, it is in my husband's name. What happens to those funds should my husband die? (I am not employed outside of the home.) TIA!

  • #2
    If you name your spouse as the beneficiary of your HSA, at your death it will become your spouse’s HSA. Distributions for qualified medical expenses remain income tax free. Your spouse does not need to have HSA-eligible health insurance to continue to hold the HSA. However, if they do and they are eligible, they may make contributions to the HSA.

    However, for non-spouse beneficiaries, the account ceases to be an HSA and becomes taxable to the beneficiary in the year of your death.