Healthcare Beginner: Introduction to Health Savings Accounts

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Health savings accounts can help you _______.

Set aside money for out-of-pocket medical expenses

Save money on taxes

Save money for medical expenses in retirement

All of the above

All of the above. HSAs provide all of these opportunities.

Which of the following is not an advantage of HSAs?

Tax savings

You can use HSA funds tax-free to pay for any expense you want

Portability of the account

HSA funds can be invested

You can use HSA funds tax-free to pay for any expense you want. While you can use your HSA funds tax-free to pay for many medical expenses, unless it is an IRS-approved qualified medical expense it cannot be paid tax-free.

A disadvantage of having a health savings account is that you must switch to a plan that is HSA-qualified, if you do not currently have such a plan.

True

False

True. HSA-qualified insurance has high deductibles as well.

Health savings accounts are limited to individuals who _______.

Are working

Don't have access to employer-sponsored health insurance

Have annual income below $250,000

Have coverage under a qualified health insurance plan

Have coverage under a qualified health insurance plan. Health savings accounts are available to individuals who have coverage under an HSA-qualified plan, but none of the other limitations apply.

Which of the following is a disadvantage of health savings accounts?

People who are low income might not enjoy the savings that HSAs provide

Having to keep one's insurance carrier

Having a third party (e.g., employer, insurance company) manage one's health coverage

None of the above

People who are low income might not enjoy the savings that HSAs provide. If your income is low enough that it is not taxable, then you will not get the tax savings provided by an HSA.