408 / What special HSA treatment is available for married spouses?

Tax-Free Distributions. An HSA owner can use his or her HSA tax-free to pay the qualified medical expenses of spouses. This benefit does not extend to domestic partners (in limited circumstances a domestic partner could be a tax dependent and an HSA owner can use an HSA for a tax dependent).

Beneficiary Treatment. A spouse beneficiary can treat the HSA as his or her own upon the death of the HSA owner. Non-spouse beneficiaries must take a full distribution of the money remaining in the HSA.

Divorce Transfer. An HSA owner can transfer assets into an HSA of former spouse in the case of a divorce.

Estate Tax Treatment. If a spouse is named as the beneficiary of the HSA, the treatment of the HSA may change for estate tax purposes.

Family HDHP Treatment. Spouses covered under a family HDHP are capped at the combined HSA family limit. Also, if one spouse has a family HDHP, then both spouses are deemed to have family HDHPs. This rule closes a loophole that allowed each partner in a same-sex couple to contribute the family HSA maximum in certain circumstances.

Child of Former Spouse. An HSA owner can use the HSA to pay for medical expenses of his or her child that is claimed as a tax dependent by a former spouse (this is helpful in cases of divorce and legal separation).