To have a Health Savings Account, you must first be covered by a “qualified” high deductible health plan. (Tips readers, of course, already know this!)

Health insurers are typically not in the banking business. And many banks have stopped offering HSA’s. I just read that at the end of 2017, 22 million of us had HSAs with $45 billion in assets; that works out to a modest $2,045 per account.  Perhaps that’s why. (Numbers from Tip 152 suggest HSA growth has slowed.)

But I digress.

When opening an HSA, you usually complete a Custodial Agreement which includes a Beneficiary Designation. Did you? Where is that filed?

Here’s why I ask.

An HSA can only be held by one person at a time. You can leave your HSA to a spouse with no tax consequence. In the absence of a beneficiary designation, the proceeds are paid to the estate and the entire amount is added to income on the deceased’s final tax return.

Maybe not a big deal if your balance is at or near the $2,045 average. But what if you have a much larger balance?

Now might be a good time to check on that paperwork.