Health Savings Accounts are characterized by which of the following?

• A. They require high-deductible health plans and are tax-free.
• B. They cannot be used for retiree expenses.
• C. They are only available through private employers, not individuals.
• D. They are taxed as ordinary income when contributed.

Answer: (A)

Health Savings Accounts are designed to work with a high-deductible health plan and offer strong tax advantages. The defining feature is the HDHP pairing, and the tax benefits come from contributions being deductible (or pre-tax) and withdrawals for qualified medical expenses being tax-free, with earnings growing tax-free as well. This combination means you can save and grow funds specifically for medical costs with favorable tax treatment.

So, while some options claim нельзя use for retiree costs, HSAs can be used in retirement for medical expenses; after 65 you can withdraw for non-medical purposes but it’s taxed as ordinary income. They aren’t limited to employer sponsorship—individuals can open an HSA if enrolled in an HDHP. And contributions aren’t taxed as ordinary income at the time of deposit; they reduce taxable income.