However you should be aware that although an HSA works much the same post-65 as a traditional IRA while you're still alive, an inherited HSA is not as good as an inherited IRA. Specifically, your heir will need to pay tax on the full value in the year of your death; there is no option to stretch withdrawals out over a number of years while allowing for tax-deferred compounding.
For this reason my current plan is not to postpone any HSA withdrawals after ER. I've been saving receipts from medical expenses and will pull out the full allowed amount after we retire to cover living expenses during the first year or two. If we remain healthy we'll probably still have a fair amount left over in the HSA, but from then on we will withdraw these tax-free amounts in the year the expenses are incurred.
This is new information to me, seattlecyclone. Thank you for sharing. We're still a long way from our drawdown stage of life, but it's good to have all the information possible.
Slightly unrelated:
I've had an HSA for several years now. Before I was smart enough to scan and store my receipts in the cloud, I stuck all my HSA receipts in a folder. Most of those are now lost or physically illegible (ink rubbed off). I basically have no way to prove those expenses were for qualified medical expenses if I were audited.
In my case, the gross amount we're talking about is so small that even with the taxes and penalties, I'm not losing any sleep over it. But I assume my situation is not unique.
Is the IRS going to wake up in a cold sweat one night and realize the impossible task of figuring out who is abusing the system and who is just bad (normal?) at record keeping? Do they even care? Are HSAs just too minor to care about when compared to corporate and income taxes?