Setting a beneficiary for your HSA ensures that your savings get passed on to your loved ones in the event of your death. You’re working hard to build up your account, so you want to make sure your funds pass to your heirs the way you intend.

Just like naming a beneficiary for a life insurance policy or retirement account, an HSA beneficiary is someone who will inherit the money you’ve saved in your HSA. It’s often a quick and simple online process to set your beneficiary or beneficiaries, and you can change it later if you want.

If you choose not to designate a beneficiary, the money in your account will be included in your estate and the value will be taxable on your final income tax return.

Who can you designate as a beneficiary?

You can choose one beneficiary or choose multiple beneficiaries and assign percentages to each. Here’s how it works for different beneficiary options.

Your spouse

If a spouse is designated as your beneficiary, they become the owner of your HSA after you pass away. That means your HSA will transfer directly to them, and they become the account owner and receive all the same tax benefits. If they have an eligible health plan, they can also continue to make contributions.

Children, siblings, and others

The account ownership and its tax benefits do not transfer to any non-spouse beneficiary, including your children. Instead, the account balance will be distributed to them, and that amount will be taxable to them.