Sec. 24. (a) This section applies if an individual:

(1) whose employer participates in a medical care savings account program; and

(2) who has one (1) or more dependents who are covered under the account established for the benefit of the individual;

dies.

(b) After the death of an individual described in subsection (a), the money in the individual's medical care savings account may continue to be used for the benefit of the individual's dependents and remains exempt from taxation as provided under this chapter if, not more than sixty (60) days after the individual's death:

(1) the individual's medical care savings account is transferred to a new account administrator; or

(2) the dependents of the individual request in writing that the account administrator of the late individual's employer remain the administrator of the account, and the account administrator agrees to retain the account.

(c) If the former employer of an individual described in subsection (a) is not informed, within ninety (90) days after the individual's death, of the name and address of an account administrator to which the medical care savings account has been transferred under subsection (b)(1), the former employer shall pay the money in the medical care savings account to the estate of the individual under subsection (e).

(d) If:

(1) the dependents of an individual described in subsection (a), under subsection (b)(2), request in writing that the former employer's account administrator remain the administrator of the individual's medical care savings account; and

(2) the account administrator does not agree to retain the account;

the former employer shall, within ninety (90) days after the individual's death, pay the money in the individual's medical care savings account to the estate of the individual under subsection (e).

(e) Under the circumstances described in subsection (c) or (d), the account administrator shall distribute the principal and accumulated interest in the account to the estate of the individual by mailing a check to the personal representative of the individual (as defined in IC 29-1-1-3).

(f) The distribution of the balance in a medical care savings account under subsection (e) is not income to the individual or to the estate of the individual that is subject to taxation under IC 6-3-1 through IC 6-3-7.

As added by P.L.92-1995, SEC.2 and P.L.93-1995, SEC.2.