This report provides estimates for savings needed to cover health
insurance to supplement Medicare and out-of-pocket expenses for health
care services in retirement. It finds that a male age 65 in 2008 and
retiring at age 65 will need anywhere from $64,000 to $159,000 in
savings to cover health insurance premiums and out-of-pocket expenses
in retirement if they are comfortable with a 50 percent chance of
having enough money and $196,000 to $331,000 if they prefer a 90
Women age 65 retiring in 2008 will need anywhere from $86,000 to
$184,000 in savings to cover health insurance premiums and
out-of-pocket expenses in retirement if they are comfortable with a 50
percent chance of having enough money, and $223,000 to $390,000 if
they prefer a 90 percent chance.
What Happens To Your HSA When You Die?
Scenario 1: Your spouse is your beneficiary.
In this scenario, your spouse is your primary beneficiary and will
receive 100% of your HSA. That means your HSA will belong to your
spouse and he/she will become the owner. The owner can use the HSA
funds to pay for your qualified medical expenses incurred before
death, as well as future medical expenses of his/her tax dependents.
Your spouse can also get reimbursed tax-free at any time for qualified
medical expenses you paid out of pocket prior to your death and didn’t
reimburse. Even if your spouse isn’t HSA-eligible, they can withdraw
funds to pay for qualified medical expenses.
Scenario 2: Your beneficiary is not your spouse.
If your beneficiary is not your spouse, your HSA will be closed. Your
non-spouse beneficiary will inherit the fair market value of your
account on the date of your death. He/she then has one year to pay
your qualified medical expenses incurred before death. Any amount paid
reduces the inheritance amount and the subsequent tax burden.
Scenario 3: Your estate is your beneficiary.
If you don’t designate a beneficiary, your HSA funds will be
distributed to your estate. Your gross income for that year will be
included in the fair market value of the account. Estate taxes will
also be reduced by the same amount.
Lastly, you can put a charity (important-tractable-neglected-transparent) as the beneficiary. So if you are an effective altruist, depending on major home/auto/child expenses, it may be of interest to put as much as possible in your HSA. This is ideal for end-of-life giving.