HSA Frequently Asked Questions (FAQ)
L. HSA Beneficiaries
1. What is a beneficiary?
A beneficiary is a person or legal entity that is entitled to receive the proceeds from an estate, trust, retirement account, life insurance policy, or HSA balance at the time of the death of the account holder. A beneficiary can be one or more individuals or organizations. You can designate two types of beneficiaries:
- Primary beneficiaries are first in line to receive the designated asset upon your death
- Secondary (or contingent) beneficiaries receive the asset if there are no surviving primary beneficiaries upon your death
2. When should I review my beneficiaries?
Review and consider updating your beneficiaries when you:
- Experience a major life event such as a birth, marriage, dissolution of marriage, or death in the family
- Update your will or estate plan
- Receive a beneficiary verification notice
You will want to keep copies of your beneficiary designation forms for your records. If you do not have copies of your current beneficiary designations, request copies from your account providers.
3. Should I seek legal advice when deciding who should be a beneficiary?
Because the beneficiary designations you make can override your will, we recommend you consult with a legal advisor or an estate planning professional before you make changes.
When you designate a beneficiary, seek legal and tax advice if:
- You wish to name someone other than your spouse as a beneficiary.
- You have special estate planning needs.
- Your beneficiary is a minor who needs legal protection. If a minor child is designated as a beneficiary, you may wish to establish a guardianship or trust, as children cannot access funds until age 18.
Consult with a legal advisor to make sure you understand whether the beneficiary designations you make on insurance plans or financial accounts are affected by your will.
4. Can I assign a minor as my beneficiary?
There are specific laws regarding the payment of benefits to minor children. Before listing your minor child(ren) as beneficiaries, you should consult your legal advisor to determine the best way to accomplish this under state law.
5. How do I add a beneficiary?
You may add or update your beneficiaries at any time online at iu.nyhart.com. Once logged in, click on Your Balances, and then click on Accounts. Under the Profile section, click on Profile Summary. Go to the Beneficiaries section and click on Add Beneficiary. Please note that adding a beneficiary does require the beneficiary’s Social Security Number.
You may also send a completed HSA Beneficiary Change / Spousal Consent Form to Nyhart.
For any questions regarding changing your beneficiary, or if you want to assign beneficiary rights to your estate or a living trust, please contact Nyhart directly at 800-284-8412 or .
6. What are the survivor benefits associated with my Health Savings Account?
Your Health Savings Account will pass to your surviving spouse or named beneficiary. If your spouse is the recipient, no taxes will be assessed if the funds are used for qualified health expenses. If someone other than a spouse is the beneficiary, that person will have to pay applicable taxes. If you are unmarried and do not have a named beneficiary, the money is disbursed to your estate and subject to any applicable taxes.
Beneficiary designations can be done at any time online at iu.nyhart.com. If you want to assign beneficiary rights to your estate or a living trust, please contact Nyhart directly at 800-284-8412 or .
7. What happens to my HSA after my death?
If you have a beneficiary on your HSA, your beneficiary will be able to submit an HSA Death Distribution Form and request the HSA be sent to the estate, or converted to an HSA in the surviving spouse’s name.
If no beneficiary is listed on your HSA, the state of Indiana requires the HSA distribution to be made to the estate of the deceased. Extra documentation may be requested to process a death distribution to an estate. If you need assistance with completing the HSA Death Distribution Request Form, please contact Nyhart directly at 800-284-8412 or at .
8. What is needed for a Death Distribution?
If a beneficiary is on the HSA, Nyhart will need the HSA Death Distribution Request Form to be completed and returned to them with a copy of the death certificate.
If a beneficiary was not listed on the account, Nyhart will need a completed HSA Death Distribution Form, a copy of the death certificate, and one of the following:
- Letters Testamentary for Estate
- Small Estate Affidavit
- Affidavit of No Administration
If a death distribution does not have the necessary paperwork, Nyhart will reach out to the submitter via letter or phone to request additional documentation.