What are Health Savings Accounts (HSAs) designed for?

Health Savings Accounts (HSAs) are specifically designed to provide individuals with a tax-advantaged way to save money for qualifying medical expenses. These accounts can be funded with pre-tax dollars from income, and the funds can be used to pay for a wide range of medical costs that are not covered by insurance, such as deductibles, copayments, and certain other health-related expenses.

The key feature of HSAs is that contributions to the account and withdrawals for qualifying medical expenses are exempt from federal income tax, making them an attractive option for managing healthcare costs. Additionally, any unspent funds can roll over year-to-year, allowing for accumulation of savings that can be used for future healthcare needs.

While HSAs can also be used effectively in retirement planning—since funds can be withdrawn for non-medical expenses after age 65 without penalty—this is not their primary purpose. The accounts are not intended solely for covering non-medical expenses or funding health insurance premiums, which further delineates their specific function within the healthcare financial management framework. Therefore, the answer highlighting HSAs as tax-advantaged savings for qualifying medical expenses aligns perfectly with their intended use.