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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Health Savings Account after death

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: When an individual dies who has a HSA set up, can the estate submit final medical bills that were not covered by other insurance?

A: This question is probably best answered from a practical viewpoint rather than from a legal or tax perspective. An HSA administrator will continue to pay benefits from the account under normal procedures until being notified of the death of the account owner. Some HSA accounts accept claims requests from third parties, others do not. This is usually a function of the options selected when the account was established. It seems natural that some health care providers, caretakers and even the executor of the estate would submit final claims in this manner. Once notified of the death of the account owner, the account administrator will stop paying claims and will begin the process of transferring ownership of the account to the beneficiary. At this point it would be too late to disburse and claim. This raises a few planning considerations: If the intent is to pay outstanding claims with tax-free funds to reduce estate value, then it makes sense to submit all final claims before transferring ownership of the account. On the other hand, in a small estate where the medical liabilities exceed the person's insurance and personal assets it might make sense to transfer the asset to the HSA account beneficiary to try to salvage some value before the asset is depleted. To our knowledge, a health care provider has no priority claim under any state law to the HSA funds of a decent, so the estate settlement procedure for this asset would be handled in the same manner as any other asset. In other words, it is common for the family members who are named as account beneficiaries to receive something from the estate even though the health care creditors might not be paid in full. Again, this response is based on the "real life" way that this issue would most likely be handled by most people. Keep in mind that the legal response might be governed by state probate laws and have little to do with (and may actually be in conflict with) the operating procedures of an HSA administrator.


More resources:

Questions and Answers about Health Savings Accounts