May an HSA trust or custodial agreement restrict HSA distributions to pay or reimburse only the account holders qualified medical expenses?
No. The HSA trust or custodial agreement may not contain a provision that restricts HSA distributions to pay or reimburse only the account holder’s qualified medical expenses. The account holder is entitled to distributions for any purpose and distributions may be used to pay or reimburse qualified medical expenses or for other nonmedical expenditures. Only the account holder may determine how the HSA distributions will be used. However, any amount of the distribution not used exclusively to pay for qualified medical expenses of the account holder, spouse, or dependents is includable in gross income of the account holder and is subject to an additional 10% tax on the amount includable. The exceptions: distributions made after the account holder’s death, in case of disability, or attainment of age 65. There are also no restrictions on the frequency or minimum amount of HSA distributions.
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- May an HSA trust or custodial agreement restrict HSA distributions to pay or reimburse only the account beneficiary’s qualified medical expenses?
- May an HSA trust or custodial agreement restrict HSA distributions to pay or reimburse only the account holders qualified medical expenses?
