Which statement about HSAs is true?

Which statement about HSAs is true?

• A. You can contribute to an HSA even if you are not enrolled in a high-deductible health plan
• B. HSA funds can be used for qualified medical expenses
• C. HSAs are not linked to any taxes
• D. HSA distributions are always tax-free

Answer: (B)

HSAs are tax-advantaged accounts that pair with a high-deductible health plan to help you save for medical costs. The statement that HSA funds can be used for qualified medical expenses is correct because withdrawals for these expenses are tax-free, which is the main benefit of an HSA. This includes things like doctor visits, prescriptions, dental, and vision care. The other choices miss important rules: you generally must be enrolled in an HDHP to contribute to an HSA, not just any plan. HSAs do offer tax advantages, but they are tax-advantaged—contributions may be deductible and growth is tax-free, not simply “not linked to taxes.” And distributions are tax-free only when used for qualified medical expenses; distributions for non-qualified costs are taxable and may incur penalties (though after age 65 you can withdraw for non-medical costs with taxes owed but no penalty).

HSAs are tax-advantaged accounts that pair with a high-deductible health plan to help you save for medical costs. The statement that HSA funds can be used for qualified medical expenses is correct because withdrawals for these expenses are tax-free, which is the main benefit of an HSA. This includes things like doctor visits, prescriptions, dental, and vision care.

The other choices miss important rules: you generally must be enrolled in an HDHP to contribute to an HSA, not just any plan. HSAs do offer tax advantages, but they are tax-advantaged—contributions may be deductible and growth is tax-free, not simply “not linked to taxes.” And distributions are tax-free only when used for qualified medical expenses; distributions for non-qualified costs are taxable and may incur penalties (though after age 65 you can withdraw for non-medical costs with taxes owed but no penalty).