Health Insurance Mastery Practice Exam

Health savings accounts (HSAs) are primarily designed to address which of the following?

1. Retirement savings

2. Medical expense coverage

3. Savings for deductible payments

4. Tax-free investment growth

The correct answer is: Medical expense coverage

Health Savings Accounts (HSAs) are primarily established to provide individuals with a tax-advantaged way to save for qualified medical expenses. These accounts allow individuals with high-deductible health plans to contribute pre-tax dollars, which can be used for a variety of out-of-pocket healthcare costs, including deductibles, copayments, and other eligible expenses. The purpose of HSAs is to encourage individuals to manage their healthcare expenditures and provide them with a means to cover potentially significant medical costs without negatively impacting their overall financial situation. While HSAs can certainly contribute to retirement savings, particularly since funds can remain in the account and grow tax-free over time, their primary function is to ensure that individuals have accessible funds specifically for medical expenses. Moreover, the tax benefits associated with HSAs, such as tax-free withdrawals for qualified medical expenses and tax-deductible contributions, further emphasize their role in managing healthcare costs rather than promoting broader savings strategies. In summary, the correct choice reflects the essential purpose of HSAs, which is to facilitate savings specifically earmarked for medical expenses, making healthcare more manageable for account holders.