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.

This bill would let people use money from a Health Savings Account (HSA) to pay funeral costs for the person who owned the account. These withdrawals would count as qualified HSA spending, up to $5,000, so they wouldn’t face the usual taxes and penalties that apply to non-qualified uses. Covered costs include things like burial or cremation, embalming, a casket or urn, clothing for the remains, a funeral director’s services, a venue fee, a hearse, transporting the remains, grave digging, a grave liner, and a grave plot.

For 90 days after the account holder’s death, these funeral costs are treated as if they were incurred right before the person died, which helps the family use the HSA funds for the funeral during that time window. The change would apply to amounts paid after the law takes effect, in tax years ending after that date.

Key points:

• Who is affected: People with HSAs and their families.
• What changes: Up to $5,000 in HSA funds could be used for funeral costs as a qualified expense; a 90-day grace period after death helps families access the funds.
• When: Applies to eligible amounts paid after the law is enacted, for tax years ending after that date.