Clear Money Guide
What this guide covers
A quick view of the questions and evidence developed below.
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Updated July 28, 2026. Quick answer: A surviving spouse can treat it as their own HSA. Anyone else receives the entire balance as taxable income in the year of death — there is no 10-year window and no way to spread it.
Related reading on this site: IRS Publication 969.
Form 8606 and Form 8889 for 2025, read line by line: Form 8889 lines 14a to 14c, Form 8889 lines 15 and 16 and Form 8889 lines 17a and 17b.
Schedule 2 (Form 1040) for 2025, read line by line: Schedule 2 lines 17c to 17f.
State by state, whether HSA contributions are taxed by the state itself: state tax on HSA contributions.
The harshest rule in the inherited-account world
Inherited IRAs get ten years. An inherited HSA held by a non-spouse gets nothing: the account ceases to be an HSA and the full fair market value is income to the beneficiary in the year of death.
| Beneficiary | Treatment |
|---|---|
| Surviving spouse | Becomes their own HSA — nothing taxable |
| Anyone else | Entire balance taxable in the year of death |
| The estate | Included on the decedent’s final return |
A beneficiary can generally reduce the taxable amount by the decedent’s qualified medical expenses paid within one year after death, if the expenses were incurred before death (IRC §223(f)(8)). That is the only meaningful relief available and it has a deadline: gather the medical bills immediately.
The planning consequence
An HSA is an excellent account to spend down late in life and a poor one to leave to children. Where an estate contains both an HSA and a traditional IRA and a choice about which to draw on first, this rule usually decides it.
Run your own numbers. HSA vs Roth calculator — compare the two on your bracket.
Figures verified against IRC §223(f)(8) and the IRS Instructions for Forms 1099-SA and 5498-SA on September 30, 2026; the secondary analyses named below were not re-checked.
Sources
IRC §223(f)(8) (health savings account after the account beneficiary’s death); Instructions for Forms 1099-SA and 5498-SA. Final regulations on required minimum distributions, published 19 July 2024; SECURE Act (2019) and SECURE 2.0 (2022); IRC §401(a)(9); IRC §2518 (qualified disclaimers); IRC §408(d)(8) (qualified charitable distributions). Cross-checked July 2026 against professional analyses from Kitces, Grant Thornton, Ascensus, Charles Schwab and Kiplinger. Where a deadline or dollar figure is indexed or was not read in primary source for this page, the text says so rather than asserting it.
This states what the cited authority says. It is not tax advice, and inherited account deadlines turn on facts about the decedent and the plan that no page can verify for you.
Related
How a payment from an inherited HSA is reported on the 1099-SA: Box 4, the date-of-death value, the Box 3 codes.