What is the purpose of a health savings account (HSA)?

A health savings account (HSA) is specifically designed to allow individuals to save and manage funds solely for medical expenses. Contributions to an HSA can be made with pre-tax dollars, making it a tax-advantaged way to cover qualified medical costs. This can include expenses such as doctor visits, prescriptions, and other health-related services. The funds in the HSA can roll over from year to year, providing individuals with a means to accumulate savings for future healthcare needs.

The other choices focus on ideas that do not accurately reflect the purpose of an HSA. While some might see the potential for tax-free distributions on qualified medical expenses, HSAs do not provide free healthcare services nor do they cover insurance premiums completely. Additionally, HSAs are not intended for the collection of funds for insurance brokers; rather, they serve the individual account holder in managing their own healthcare expenses.