Note: This information pertains to the 2016 plan year. For 2017 information, visit Health savings accounts (HSAs): Overview.
Do I need to name a beneficiary for my HSA?
Yes. You are required to name a beneficiary for your HSA.
How do I designate or change a beneficiary on my HSA?
Note: Before you begin, make sure you have your beneficiary's Social Security number and date of birth, as you will need that information to complete this section.
To designate or change a beneficiary on your account:
- Log on to http://healthsavings.com/login/ with your username and password.
- Go to the Profile menu.
- Click My Profile.
- Click Beneficiaries.
- Click Add Beneficiary.
- Enter your beneficiary's information, then click Save Beneficiary.
If you prefer, you may download the Designation of Beneficiaries Form under Take Action. Please complete and return to the address specified on the form.
Note:If you wish to designate someone other than your spouse as your primary beneficiary and you live in a common law, community property, or marital property state, you will need to complete the Spousal Consent section when you submit your Designation of Beneficiaries Form.
Do I need to make primary and contingent beneficiary designations?
You should name both a primary and a contingent beneficiary.
- The primary beneficiary will receive 100% of your account balance upon your death.
- The contingent beneficiary will receive the account balance if the primary beneficiary predeceases you.
You can name more than one person as your primary beneficiary and more than one person as your contingent beneficiary. If you name more than one person, indicate the specific whole-number percentage of your balance to be paid to each beneficiary.
Note: Make sure your allocation percentages (for primary and for contingent) each total 100%.
How often should I review my beneficiary designations?
You should review and update your beneficiary designations periodically, particularly when you experience a major life event such as a birth, marriage, divorce, or death in the family.
Am I required to list my spouse as the beneficiary if I am married?
You may choose whomever you want to be the beneficiary of your HSA; however, only spousal beneficiaries are able to preserve the tax advantages upon a spouse's death. If you wish to designate someone other than your spouse as your primary beneficiary and you live in a common law, community property, or marital property state, you will need to complete the Spousal Consent section when you submit your Designation of Beneficiaries Form.
If your spouse is designated as the beneficiary of your HSA, he or she will not be responsible for taxes on distributions for qualified medical expenses upon inheriting the account.
As the beneficiary, your spouse becomes owner of your HSA, allowing him or her to:
- Make tax-free distributions from the HSA for qualified medical expenses.
- Maintain tax-free growth of the funds in the account.
- Contribute to the account if he or she has HSA-qualified insurance (HDHP).
Note: Your spouse will not lose the ability to make tax-free withdrawals for qualified medical expenses if he or she does not qualify to contribute to the HSA.
If you fail to designate a beneficiary, or are married and name someone other than your spouse as beneficiary, the account ceases to be an HSA upon your death. As a result, the fair market value of the account becomes taxable in the year of your death for non-spousal beneficiaries.
Note: Any qualified medical expenses you incur before your death may be reimbursed from the account before determining the "fair market value" of the account.
Please consult your tax advisor if you have questions about the potential tax consequences associated with your HSA beneficiary designation.
Contact HealthSavings Administrators at 888-354-0697, Monday through Friday from 8:30 a.m. to 5 p.m., Eastern time. You can also email questions to askus@HealthSavings.com.