No, there is no Illinois law that specifically defines a bank’s role with respect to an HSA. We recommend consulting with a tax professional to clarify your bank’s role and requirements regarding HSAs, but we believe that a bank may serve as either a trustee or custodian for such accounts.

Under the Internal Revenue Code and IRS guidance, an HSA is a “trust” that must be established with a “qualified trustee” under state trust laws. Banks are expressly listed as qualified trustees who may establish HSA accounts. However, in various guidances, the IRS states that banks may serve as either trustees or custodians of HSAs. In fact, the IRS has promulgated two different forms for establishing an HSA — Form 5305-B to establish a trust account, and Form 5305-C to establish a custodial account. Consequently, we believe that whether a bank is a “trustee” or “custodian” of an HSA depends on the type of agreement the bank enters into with the customer.

For resources related to our guidance, please see:

• Internal Revenue Code, 26 USC 223(d) (“The term ‘health savings account’ means a trust created or organized in the United States as a health savings account exclusively for the purpose of paying the qualified medical expenses of the account beneficiary, but only if the written governing instrument creating the trust meets the following requirements: . . . The trustee is a bank (as defined in section 408(n)), an insurance company (as defined in section 816), or another person who demonstrates to the satisfaction of the Secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section.”)

• Internal Revenue Bulletin: 2008-29 (July 21, 2008) (“Q-38. When is an HSA established? A-38. An HSA is an exempt trust established through a written governing instrument under state law. Section 223(d)(1). State trust law determines when an HSA is established. Most state trust laws require that for a trust to exist, an asset must be held in trust; thus, most state trust laws require that a trust must be funded to be established. Whether the account beneficiary’s signature is required to establish the trust also depends on state law.”)

• Internal Revenue Bulletin: 2004-2 (January 12, 2004) (“Q-9. Who is a qualified HSA trustee or custodian? A-9. Any insurance company or any bank (including a similar financial institution as defined in section 408(n)) can be an HSA trustee or custodian. In addition, any other person already approved by the IRS to be a trustee or custodian of IRAs or Archer MSAs is automatically approved to be an HSA trustee or custodian. Other persons may request approval to be a trustee or custodian in accordance with the procedures set forth in Treas. Reg. § 1.408-2(e) (relating to IRA nonbank trustees). For additional information concerning nonbank trustees and custodians, see Announcement 2003-54, 2003-40 I.R.B. 761.”)

• IRS Publication 969 (2016), Health Savings Accounts and Other Tax-Favored Health Plans (“Health Savings Account (HSA) is a tax-exempt trust or custodial account you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur.”)

• FDIC Trust Examination Manual, Health Savings Accounts (“In general, HSAs are tax-exempt trusts or custodial accounts created exclusively to pay for the qualified medical expenses of the account holder and his or her spouse and dependents.”)

• IRS Form 5305-B Health Savings Trust Account (Revised October 2016)

• IRS Form 5305-C, Health Savings Custodial Account (Revised October 2016)

• Trusts and Trustees Act, 760 ILCS 5/2(2) (“‘Trustee’ means the trustee or any successor or added trustee of the trust, whether appointed by or pursuant to the instrument creating the trust, by order of court or otherwise . . . .”)