What does the health savings account (HSA) typically fund?

A health savings account (HSA) is specifically designed to be used in conjunction with high-deductible health plans (HDHPs) and is primarily intended to fund qualified medical expenses. This includes costs such as deductibles, copayments, and certain healthcare services that the high-deductible plan may not cover fully. By allowing individuals to save money tax-free for these expenses, HSAs provide a financial tool that encourages saving for healthcare costs that occur before the high deductible is met.

While HSAs can technically be used for a broader range of expenses, such as retirement, using the funds in such a manner can have tax implications and may not align with the core purpose of the account. Therefore, understanding that HSAs are aimed at covering high-deductible medical expenses helps clarify their focus and utility in the healthcare financing landscape.