Understanding Health Savings Accounts (HSAs)

What is one of the main benefits of a Health Savings Account (HSA)?

• It offers a fixed interest rate.

• It provides a loan facility.

• It offers tax advantages.

• It requires no eligibility criteria.

Which of the following is NOT a qualified medical expense for an HSA?

• Prescriptions

• Gym memberships

• Eyeglasses

• Doctor visits

What type of health insurance plan must you have to open an HSA?

• Low deductible health plan

• No insurance plan is needed

• High deductible health plan

• Any health insurance plan

What is the maximum annual contribution limit for an individual to an HSA in 2025?

• $4,300

• $3,000

• $5,000

• $6,500

What additional contribution is allowed for individuals over 55?

• $500

• $1,000

• $1,500

• $2,000

What happens to the money in an HSA if it is not used by the end of the year?

• It must be withdrawn.

• It is taxed.

• It rolls over to the next year.

• It is forfeited.

How does an HSA differ from a Flexible Spending Account (FSA)?

• HSA funds are taxed annually.

• HSA funds expire at the end of the year.

• HSA funds can be invested.

• HSA funds are only for dental expenses.

What is a key advantage of leaving money in an HSA to grow over time?

• It earns a fixed interest rate.

• It can be used for non-medical expenses tax-free.

• It can become a long-term savings tool for healthcare costs.

• It must be used within five years.

What penalty applies if you withdraw HSA funds for non-qualified expenses before age 65?

• 20% penalty

• 10% penalty

• No penalty

• 30% penalty

After age 65, how are withdrawals from an HSA for non-medical expenses treated?

• They are tax-free.

• They incur a penalty.

• They are taxed as regular income.

• They are not allowed.