A Health Savings Account (HSA) should be treated like a savings or checking account under the Uniform Disposition of Unclaimed Property Act (UPA), subject to the discussion below.

An HSA is a custodial account that may be established as a savings or checking account. Unlike an individual retirement account (IRA) — which is specifically addressed in the UPA — an HSA does not have a required minimum distribution age. Consequently, a bank should treat an HSA like a savings or checking account for the purpose of determining abandonment under the UPA. We spoke with an agent in the Unclaimed Property Reporting Division of the Illinois State Treasurer’s Office who confirmed this approach and further suggested that a bank should review its HSA account agreement for terms that may relate to inactivity or abandonment.

That said, given the nature of HSAs, we urge banks to exercise caution when categorizing such accounts as “abandoned.” For example, many accounts may remain inactive because IRS rules penalize withdrawals that are not for a “qualified medical expense.” In addition, HSA funds carry over each year if they are not withdrawn, and owners are not required to make contributions or distributions. For those reasons, a bank should make every effort to confirm such accounts are truly abandoned before remitting them to the State.

For resources related to our guidance, please see:

• Uniform Disposition of Unclaimed Property Act, 765 ILCS 1025/2(a) [Repealed effective 1/1/18] (Outlines the requirements for a presumption of abandonment on any demand, savings, or matured time deposit.)