It is important to understand how HCSP assets are distributed upon your death to avoid an improper beneficiary designation or unforeseen surprises. You are encouraged to periodically review your beneficiary designation to ensure it is up-to-date.
If there is a balance in the HCSP account at the time of death, the assets are transferred to an HCSP account for another living person(s) to be used for the reimbursement of eligible healthcare expenses incurred after the date of the participant's death.
Upon your death, If you are survived by:
To name, change, or remove your beneficiary designation
Complete a Beneficiary Designation form. A beneficiary designation is effective upon receipt by MSRS and supersedes all prior designations. A valid beneficiary designation must be on file with MSRS prior to your death.
It's a good idea to name a beneficiary, even if you have a spouse or legal dependents. Life events - including marriage, divorce, death or children growing up - can impact who will receive any remaining HCSP assets upon your death. And a beneficiary designation is even more critical if you do not have a spouse or legal dependents.
Death of a beneficiary
If your named beneficiary predeceases you, their share is distributed to any surviving beneficiaries upon your death.
Example: Let's say Paul and Laura are your beneficiaries. Laura died. Assuming you do not change your beneficiary designation before you die (and are not survived by a spouse or legal dependents), Paul would inherit 100% of the HCSP account balance. Laura's share would not be paid to her survivors. This is a per stirpes designation, which is not allowed by the HCSP.
If both Paul and Laura predecease you and you did not designate a new beneficiary before you died, the representative of your estate must name the person eligible to receive the remaining HCSP account balance.
Divorce and your beneficiary designation
Your former spouse is no longer entitled to the HCSP account assets upon your death unless mandated by the divorce decree. To name your former spouse as the beneficiary, complete a Beneficiary Designation form after the effective date of the marriage dissolution.
You cannot request reimbursement of your former spouse's medical expenses, even if you are required by the divorce decree to pay those expenses.