What is the tax treatment of an HSA after the death of an account holder?
The HSA will be treated as the surviving spouse’s HSA, but only if the spouse is named the holder. The account will not be treated as an HSA after the account holder dies and there is no surviving spouse or the surviving spouse is not the beneficiary. The account will then be included in the federal gross income of the estate or the named beneficiary. Any qualified medical expenses incurred by the decedent before death and paid by the recipient of the HSA will reduce the taxable amount. The amount of estate tax paid if the HSA was included in the estate will also reduce the amount.
