Question 1

A health savings account may be established by a person who is covered under a qualified high-deductible health plan.

To establish a health savings account (HSA), an individual must be covered by a qualified high-deductible health plan (HDHP). This type of insurance plan allows individuals to contribute to an HSA, providing tax advantages for medical expenses.

A) Has no health insurance

This option is incorrect because an individual cannot establish a health savings account without being covered by a qualified high-deductible health plan. Having no health insurance means there is no qualifying plan in place to support the establishment of an HSA.

B) Is receiving benefits from Medicare

This option is also incorrect. Individuals who are receiving Medicare benefits are not eligible to contribute to a health savings account. Enrollment in Medicare disqualifies an individual from opening or contributing to an HSA.

C) Is covered under a qualified high-deductible health plan

This option is correct as it directly aligns with the requirements for establishing a health savings account. Individuals with a qualified HDHP can contribute to an HSA, which provides tax benefits and can be used for qualified medical expenses.

D) Is claimed as a dependent on another person's tax return

This option is incorrect because dependents cannot open their own health savings accounts. To establish an HSA, one must be an independent taxpayer who meets the eligibility criteria, including having a qualified high-deductible health plan.

Conclusion

The correct answer is C, as only individuals covered under a qualified high-deductible health plan are eligible to establish a health savings account. Options A, B, and D fail to meet the necessary criteria for HSA eligibility, highlighting the importance of having the right type of health insurance coverage.