The election is over, Congress has changed. If I ran NFDA here’s what I would do.

November 10, 2026/Business, Preneed, Regulations/

Now that the television advertising has stopped, I know that the United States recent election cycle is over. And, whether your favorites won or lost it is time, or it will be come January 2027 when this current group of elected officials are sworn in, to get down to business and work for the American people.

It appears that one of the battle cries of the American people during this past election cycle was “Affordability”. The price of gasoline might be an indication but it appears that the simple “affordability of life” in the United States is too high for the voter and they want to see their government do something about that situation.

Tom Anderson
Funeral Director Daily

The ”affordability” issue can be debated but as I look at the current make-up of Congress that is now heavily Democrat weighed in a situation where one might expect, on a relative scale, Democrats to be less friendly to businesses than their Republican counterparts. If that is true, then small family-owned funeral homes can expect less friendly business legislation to be sent their way.

I do think, however, that funeral homes can help themselves by helping the American public make things more affordable. . . .and in this case, make funerals more affordable.

A Little Background — Angie and I are at the age where we are doing a little estate planning. One of the things that I discovered over the past year was how an inherited Health Savings Account (HSA) is incredibly tax inefficient when inherited by anyone other than a surviving spouse. Here’s just a little about what I learned: “If an HSA is inherited by another, someone other than a spouse (such as children), the account ceases to be a HSA. The entire balance becomes fully taxable to the beneficiary as ordinary income in the year of the owner’s death.”

It was that knowledge, and more education on the subject, that led me to publish this article in Funeral Director Daily back in late September.

The Issues holding us Back — HSA’s must be used for “Qualified Medical Care” as defined under IRS Code Section 213(d) which excludes funeral, burial, and cremation expenses. However, under current law once an account holder dies without a spouse, the HSA becomes a taxable distribution to the estate of the heirs.

The NFDA Effort — To date, Oklahoma Republican Congressman Kevin Hern has introduced H.R. 2436 which would allow up to $5,000 to be paid from HSA accounts per funeral and it would create a 90-day window after death to do this. NFDA does support this effort, but it has never been voted on and will need to be re-introduced in the new Congress if not voted on before the end of this Congress.

Funeral Director Daily Solution: In a business-wise move that works to make funeral, cremation, and memorialization expenses more affordable by the public, I would suggest legislation that allows up to $12,000 per person to be taken out of an HSA account, prior to death, to be put into a irrevocable preneed funeral insurance account.

It is a solution that is “Business-friendly” while truly making life, or death in this case, more affordable for the American public. The $12,000 individual Preneed amount number is arbitrary on my part knowing that any amounts that come out of a HSA prematurely are not available to be a tax resource by the federal government at a later date. Like every other federal financial change and considering America has a debt of $41 trillion, the exact amount of the proposed preneed set-aside probably has room for debate.

Here’s a little chart I created to illustrate how this could help Americans, realize more value from their HSA’s by keeping them out of their estate:

Feature	The Estate Planning Problem	Why HSA Funeral Prepayment Helps
Tax Mitigation	Non-spouse heirs lose up to 37%+ of the HSA balance to income tax instantly.	Funds would be deployed tax-free for a final, guaranteed expense.
Liquidity at Death	Estates often lock up, leaving families to pay funeral costs out-of-pocket.	Prepaying guarantees the service is covered without stressing survivors.
Asset Protection	Large HSAs spent down rapidly after age 65 on non-medical items incur heavy taxes.	Safely draws down the “excess” HSA balance during life.

Do HSA accounts have enough money in them to do this?: I would suggest that not all do. However, the accounts are fast becoming a popular place to deposit tax deductible money each year. For instance, even if a couple waited until age 55 before they made a single contribution to their account and then made the maximum contribution of, using 2027’s allowable amount of $11,000 per couple ($9k normal and $1k each for 55 and over) and contributed that amount for the ten years prior to going on Medicare at age 65, when contributions are no longer allowable, they would have about $138,000 saved considering a 5% interest growth rate.

So, while not everybody puts in the maximum amount, I think we can deduce that the growth over time could make these accounts large enough to be able to reach the $12,000 preneed maximum by age 65. Just to further that thought, a $2,000 contribution each year starting at age 25 and continued for 40 years at the same 5% growth rate would accumulate over $240,000 at age 65.

Please note that the amounts noted above do not take into effect what a person may take out of their HSA account over their lifetime to satisfy health insurance deductibles or other medical related payments. However, it is my opinion that unless the account holder is chronically ill, an HSA value should accumulate over long periods of time.

Legislation Timeline: My take is that this could be a legislative bi-partisan issue that can help with the “Affordability” issue as well as be a big help to those small businesses in the Death Care realm. One might argue that there would be a loss of tax-dollars brought to the Treasury upon the death of a HSA account holder without a surviving spouse. . . . . and the legislation would have to weigh that against the positive “affordability” of Death Care costs that would come from freeing HSA accounts to purchase preneed accounts.

While this could be a bi-partisan issue I would go even further and say it could be a bill that the lame-duck Republican Congress could pass in their last two months in office to offer a glimpse of positive action on affordability as they go out of power.

An interesting sideline to proposed legislation of this kind, the current HSA/funeral cost bill stuck in the House of Representatives was authored by Oklahoma’s Kevin Hern. Last Tuesday Kevin Hern became the new U.S. Senator from Oklahoma in a special election held to replace for Oklahoma Senator Markwayne Mullin. He will take his seat as a U.S. Senator immediately.

Who would support this idea? My take is the following have reason to do so:

Preneed companies who have seen their Average Face Value per Case falling in the wake of cremation centered services
Traditional Funeral homes who have seen their average revenue per case stagnate at best.
Casket companies who would see the $12,000 per account and maybe believe it would allow for more casketed cases
U.S. citizens, especially those over the Medicare age who would be able to make use of the HSA withdrawal for Death Care purposes and be able to maximize the money, for their benefit, that they have saved in their HSA.

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