You will choose a beneficiary when you set up your HSA.
- If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse’s HSA after your death.
- If your spouse is not the designated beneficiary of your HSA:
- The account stops being an HSA, and
- The fair market value of the HSA becomes taxable to the beneficiary in the year in which you die.
- If your estate is the beneficiary, the value is included on your final income tax return.