Another HSA Question

[El Magnifico Loco]

I realize those with HSA plans can withdraw their HSA savings tax free as long as the withdrawals are supported by receipts of qualified medical expenses that were incurred while the HSA plan was in force. Even if those withdrawals occur many years into the future.

But what about after the HSA owner passes? Can the surviving spouse (who inherited the HSA) also withdraw those monthe as if the original owner was still alive?

And what about the deceassed owner's dependents' medical expenses? Can the surviving spouse also withdraw the HSA monies to cover those, again assuming the medical expenses were incurred while the dependents were covered under the HSA?

I've never seen anything written about these scenarios. Thanks in advance.

 

[thefinancebuff]

I realize those with HSA plans can withdraw their HSA savings tax free as long as the withdrawals are supported by receipts of qualified medical expenses that were incurred while the HSA plan was in force. Even if those withdrawals occur many years into the future.

But what about after the HSA owner passes? Can the surviving spouse (who inherited the HSA) also withdraw those monthe as if the original owner was still alive?

And what about the deceassed owner's dependents' medical expenses? Can the surviving spouse also withdraw the HSA monies to cover those, again assuming the medical expenses were incurred while the dependents were covered under the HSA?

I've never seen anything written about these scenarios. Thanks in advance.

It's not just for expenses that were incurred while the HSA-eligible plan was in force. The expenses can be incurred by self, spouse or dependent well after the person no longer has an HDHP.

Publication 969 spells out what happens after the HSA owner passes.

Death of HSA Holder
You should choose a beneficiary when you set up your HSA. What happens to that HSA when you die depends on whom you designate as the beneficiary.

Spouse is the designated beneficiary. If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse's HSA after your death.

Spouse isn’t the designated beneficiary. If your spouse isn’t the designated beneficiary of your HSA:
- The account stops being an HSA, and
- The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die.

If your estate is the beneficiary, the value is included on your final income tax return.