What do people usually save in a health savings account (HSA)?

Health savings accounts (HSAs) are designed specifically to allow individuals to set aside money on a pre-tax basis to pay for qualified medical expenses. One of the key features of an HSA is that the funds contributed to the account can grow tax-free, and withdrawals for qualifying medical expenses are also tax-free, making it a highly efficient way for individuals to manage healthcare costs.

Qualified medical expenses under IRS guidelines include a wide variety of costs beyond just prescriptions, such as copayments, deductibles, dental treatments, vision care, and other health-related expenditures. This flexibility enables account holders to use their HSAs for various healthcare needs throughout their lifetime.

In contrast, the other options do not accurately reflect the primary purpose and use of HSAs. While purchasing insurance policies, general savings, or funds strictly for prescriptions may be aspects of financial planning, they do not capture the intended use of HSAs, which is specifically for tax-advantaged savings for qualified medical expenses.