To amend the Internal Revenue Code of 1986 to treat distributions from health savings accounts for funeral expenses of the account beneficiary as qualified distributions.
Summary
What This Bill Does
This bill expands qualified health savings account distributions to cover funeral expenses of the account beneficiary. It adds funeral expenses to the section 223(d)(2)(A) qualified-distribution list and defines those expenses as costs incident to care and disposition of the beneficiary's remains after death. Covered costs include burial, cremation, embalming, interment, inurnment, preparing remains, clothing, caskets or urns, hearse service, funeral director services, venue fees, transportation of remains, grave digging, grave liners, and grave plots. The total funeral-expense amount treated as qualified is capped at $5,000 per account beneficiary. For 90 days after the beneficiary dies, funeral expenses are treated as if incurred immediately before death, allowing post-death payment timing to fit HSA rules. The amendments apply to amounts paid after enactment in taxable years ending after enactment.
Who Benefits and How
HSA account beneficiaries' estates benefit because up to $5,000 of funeral costs can be paid without nonqualified-distribution tax treatment. Surviving family members benefit if HSA funds can cover burial, cremation, funeral director, venue, transportation, grave, or casket costs. Funeral service providers benefit because HSA balances become an available payment source for covered funeral expenses. Estate administrators benefit from a 90-day post-death window that treats funeral expenses as incurred before death.
Who Bears the Burden and How
IRS guidance staff must update HSA qualified-distribution rules, the $5,000 cap, and the 90-day post-death timing rule. HSA trustees must administer funeral-expense distributions and beneficiary death timing. Federal taxpayers bear revenue loss if more HSA distributions avoid penalty or taxable treatment. Estate recordkeepers must document covered funeral expenses and distinguish them from nonqualified post-death expenses.
Key Provisions
- Adds funeral expenses of an HSA account beneficiary to qualified distribution treatment.
- Defines covered funeral expenses to include burial, cremation, embalming, interment, caskets, urns, funeral director services, transportation, and grave costs.
- Limits qualified funeral expenses to $5,000 per account beneficiary.
- Provides a 90-day post-death period during which funeral expenses are treated as incurred immediately before death.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Treats up to $5,000 of HSA distributions for the account beneficiary's funeral expenses as qualified distributions, including expenses paid during the 90 days after death that are treated as incurred immediately before death.
Key Policy Areas
Tax, Health Savings Accounts, Funeral Expenses
Primary Purpose
Treats up to $5,000 of HSA distributions for the account beneficiary's funeral expenses as qualified distributions, including expenses paid during the 90 days after death that are treated as incurred immediately before death.
Policy Domains
Resolution provisions
Identified Gains
- HSA account beneficiaries' estates
- Surviving family members
- Funeral service providers
- Estate administrators
Identified Costs
- IRS guidance staff
- HSA trustees
- Federal taxpayers
- Estate recordkeepers
Sponsors
Legislative Progress
In CommitteeMr. Hern of Oklahoma introduced the following bill; which was …
Referred to the House Committee on Ways and Means.
Introduced in House
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
HSA account beneficiaries' estates, Surviving family members, Taxpayers
Positive-direction: HSA account beneficiaries' estates, Surviving family members
Negative-direction: Taxpayers
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology