What is the primary benefit of a Health Savings Account (HSA)?

The primary benefit of a Health Savings Account (HSA) is that it allows individuals to pay for qualified medical expenses tax-free. HSAs provide a valuable way for account holders to save money specifically for healthcare costs, as the contributions made to the account are tax-deductible, the interest earned is tax-free, and distributions for qualified medical expenses are also tax-free. This unique tax advantage makes HSAs an effective financial tool for managing healthcare expenses, particularly for those with high-deductible health plans.

Using HSA funds for eligible medical expenses can significantly reduce the overall cost of healthcare and encourage individuals to plan for their health-related financial needs. In contrast, other options mention negative aspects or misunderstandings about HSAs, such as taxable distributions or contributions that are non-deductible, neither of which capture the strength and purpose of the account.